In order to limit credit risk as China's property crisis intensifies and spreads to the economy, two large state-owned banks in China and a leading joint stock bank stepped up scrutiny on the asset quality of their smaller peers over the past few months, and tightened standards for interbank loan to identify peers with poorer asset quality and higher default risk, Reuters quoted three sources with direct knowledge of the matter as saying.

The two large state-owned banks decided to lower interbank lending limits and set shorter repayment period for smaller peers considered as higher risk, two sources said.

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