Reuters reports that an industry body overseeing rates said that China’s reforms to the way banks calculate deposit rates will have only a limited impact on financial institutions and depositors, and banks do not need to sharply adjust deposit rates.

The body said the previous practice of multiplying the benchmark rate helped push up long-term rates and led to competition among banks to lure deposits by raising rates or unveiling innovative products.

From Monday, June 21, China will allow banks to set ceilings on deposit rates by adding basis points to the benchmark rate, a shift from the previous practice of multiplying the benchmark rate, the Self-Disciplinary Mechanism for the Pricing of Market-Oriented Interest Rates said.

Ceilings on banks’ deposit rates with maturities of more than one year have declined following the reforms, while ceilings on banks’ time deposit rates with maturities of six months or less have risen, according to the body, which is supervised by the People’s Bank of China (PBOC).