(Bloomberg) -- The People’s Bank of China avoided injecting low-cost funds into policy-oriented banks in November, despite expectations that the central bank may start to provide more financing for housing and infrastructure projects to support the economy. 

The outstanding amount of the PBOC’s Pledged Supplemental Lending program to policy banks was unchanged at the end of November from the previous month, according to the central bank’s statement published Friday.

Bloomberg News reported last month that policymakers were planning to provide 1 trillion yuan ($140 billion) in low-cost central bank funding in phases to policy banks to help programs focused on affordable housing and the renovation of urban villages. Officials were considering using the PSL program or special loans.

The PSL program is seen as an important tool Beijing has to shore up the property sector and stabilize growth next year, given that broad monetary easing steps like rate cuts have failed to turn around a real estate downturn. While it provides a potential boost to construction and investment, the program also risks adding to downward pressure on home prices if government-subsidized rental housing floods the market.

Policy banks — which are driven more by government priorities rather than profits — have in the past used PSL money to help local authorities and developers demolish old homes and provide cash compensation so homeowners could purchase new apartments.

When the PBOC hands policy banks PSL loans, it takes their qualified loans as collateral. The interest rate on the PSL loans was 2.4% at the end of September. This was lower than the one-year policy rate and the benchmark lending rate of banks. 

The PSL tool was briefly used at the end of 2022 to help policy banks like China Development Bank provide funding to infrastructure projects, which totaled 740 billion yuan and drove even more investment. The PBOC provided about 500 billion yuan in PSL loans over the last three months of 2022. 

©2023 Bloomberg L.P.