Mid-sized mainland banks have urged the industry's regulator to ease loan-to-deposit ratios as they struggle to attract deposits and expand lending amid the broader economic slowdown. The banking regulator has set the loan-to-deposit ratio (LDR) for all commercial lenders at 75 per cent, which means they can lend no more than 75 yuan (HK$92) to clients for every 100 yuan they take in. The remaining 25 yuan goes mostly to cover cash flow, bad-loan probation and reserves at the central bank. At the mainland's annual political summit in Beijing last week, top bosses at mid-sized banks including China Merchants Bank (CMB), China Minsheng Bank and China Everbright Bank complained about tightening liquidity in the banking system. CMB president Ma Weihua asked the regulator to ease the LDR as way to help lenders. Ma, a former central banker who now heads the nation's sixth-largest lender by assets, told the South China Morning Post that he proposed to the regulator that loans to small and medium-sized enterprises (SMEs) should be excluded from ratio calculations, allowing banks more flexibility to expand lending. Other mainland bankers also advised the regulator to make it easier for banks to expand their wealth-management services to attract more deposits, according to people familiar with the matter. 'There's almost a deposit crisis in the banking industry,' said a senior executive at a commercial bank in Shanghai. 'You get fewer deposits, but you still need to fight to keep your loan business growing.' Last year, some small-city commercial banks received warnings from the banking regulator after their LDR was discovered to have exceeded 80 per cent. Beijing considers the ratio a key indicator of financial risk. 'Small banks are more bound by LDR than big banks,' said Joy Yang, chief economist for Greater China at Mirae Asset Securities in Hong Kong. 'Therefore, easing LDR on small banks helps boost lending activities to support growth.' 'Also, it helps direct more loans towards SMEs as small banks lend more to SMEs,' Yang said. Beijing has also urged banks to help finance SMEs finance because private business contributes more than 60 per cent of the mainalnd's economic growth. The strict LDR requirement has also attracted attention from the central bank, which appears now on a fast track to cut banks' reserve requirement ratio (RRR) this year to boost credit growth and ease liquidity problems. Beijing has cut the RRR twice since November after six increases last year. Some analysts believe the LDR requirement has blunted the impact of the central bank's RRR cuts since the proportion of loans to deposits must stay fixed no matter how low RRR is. The central bank and the banking regulator have been aware of the dilemma and are likely to formulate new policies to help mid-sized banks, those analysts said.