The People's Bank of China, the central bank, cut the benchmark interest rate for one-year deposits by 25 basis points on July 6. The benchmark one-year lending rate was also lowered by 31 basis points.

After the cuts, the one-year deposit interest rate fell to 3 percent while that of the one-year loan interest rate dropped to 6 percent.

It was the second time that the central bank cut the benchmark interest rates this year after a 25-basis-point reduction on June 8.

The surprise rate cuts came at a time when many analysts fear the economic growth will slow further in the world's second largest economy in the second quarter.

The central bank also said it allows banks to offer 30 percent discount to borrowers, larger than the previous 20 percent, but the lower limit of the floating band of mortgage loan interests remains unchanged.

The upper limit of the floating band was previously adjusted to 1.1 times the benchmark.