China banks to make $20 billion in loans to fund 'urban village' projects

BEIJING (Reuters) - China Development Bank and the Agricultural Development Bank of China will provide credit lines worth 142.6 billion yuan ($19.87 billion) to fund the renovation of "urban villages" in the southern city of Guangzhou, the city government said.

Last July, China's cabinet outlined plans to transform "urban villages" - or underdeveloped areas - in megacities, in a bid to support the troubled property sector and aid the economy.

The loans from the state-owned policy banks - the first under the cabinet's initiative - will be used for acquiring old houses, compensating residents and building new homes, the city government said in a statement on Tuesday, adding that the first batch of 1.5 billion in such loans have been made.

China Development Bank has made loans of 9.08 billion yuan to urban village renovation projects in several cities, the official Shanghai Securities News reported.

The moves come as China unveiled fresh measures, including easing home-buying curbs, to support the ailing property market, as concerns mount about the liquidation of Evergrande.

China's central bank made 350 billion yuan in loans to policy banks through its pledged supplementary lending (PSL) facility in December, amid expectations of increased support for the country's ailing housing sector.

($1 = 7.1773 Chinese yuan renminbi)

(Reporting by Kevin Yao; Editing by Alexandra Hudson)