Shenzhen-based brokerages GF Securities and China Merchants Securities said on Monday they had been asked to lift their quotas on short-term fundraising by Beijing, a move that may boost lending to smaller financial firms.

"The company has received a notice from the People's Bank of China [PBOC] to improve the upper limit to 17.6 billion yuan [US$2.6 billion] for outstanding commercial bill issuance," GF Securities said in a filing to the Shenzhen Stock Exchange on Monday morning.

Commercial bills are a key form of short-term fundraising in the interbank market. The quota at GF Securities was earlier set at 12.4 billion yuan, according to previous filings.

China Merchants Securities said its cap on outstanding bill issuances had been revised to 31.6 billion yuan from 7 billion yuan, set last year.

Beijing is working to ease interbank liquidity tightness after the takeover of Baoshang Bank, an Inner Mongolia-based mid-sized commercial bank, last month.

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"This is another action by the PBOC to ease the liquidity pressure of small and medium sized financial institutions," said David Yin, analyst with rating agency Moody's.

"With the lifting of quotas, leading brokers could raise funding in the market by issuing more commercial papers, and use the proceeds to provide financing to lower tier financial institutions that can provide qualified collaterals. We believe the action is a positive for financial stability."

Zhao Xianghuai, an analyst with Everbright Securities, said in a note on Monday: "Lifting the cap for commercial bill issuance in the biggest brokerage firms will help transfer liquidity to smaller players.

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"Tension has been spreading to the interbank market and non-banking institutions after the Baoshang incident. The regulators have been working on boosting confidence by easing credit, but the market is still digesting the information," he said.

Shares in GF Securities closed 1.3 per cent higher at 13.9 yuan. Its H shares closed 0.5 per cent higher at HK$9.3. China Merchants Securities added 0.4 per cent to 17.1 yuan in Shanghai, while its H share edged up by 0.2 per cent to HK$9.7.

The brokerages are the latest in mainland China to be ordered to ease interbank liquidity tightness. Four other companies " Citic Securities, Haitong Securities, Huatai Securities and Guotai Junan Securities " have filed similar documents to stock exchanges, notifying a lift in caps on short-term fundraising activity, in the past week.

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Citic, for instance, has had its cap for outstanding commercial bill issues lifted significantly to 46.9 billion yuan from 15.9 billion yuan. At Huatai, the quota was lifted to 30 billion yuan from 21.6 billion yuan.

Banking regulators including the PBOC and the China Banking and Insurance Regulatory Commission (CBIRC) took over Baoshang Bank due to "serious" credit risks.

A regulatory team found the bank was controlled by a private conglomerate, the Tomorrow Group, which had a 89 per cent stake in the lender. This surpassed by a large margin the shareholding cap of 30 per cent for single shareholders of commercial banks.

The takeover of Baoshang shocked China's interbank market, where smaller banks tend to borrow from the bigger players for aggressive investments. Some of the smaller lenders have faced rising pressure from the bigger banks, whose confidence was hit by the Baoshang incident.

The PBOC guaranteed its support for Bank of Jinzhou, a small regional bank, through a financial support tool on June 10. The lender was able to issue a certificate of deposits worth 2 billion yuan at a yield of 3.21 per cent.

The bank's investors are insured by the Chinese central bank. If the Bank of Jinzhou fails to redeem the certificates in full at their expiration date, China Bond Insurance, a state-owned credit insurance provider backed by the PBOC, will make up the balance.