Yuan-denominated deposits decreased by 100.1 billion yuan in April, sending the outstanding account of yuan deposits to 97.83 trillion yuan by the end of last month.

"The decline in new loans is rooted in weak credit demand from enterprises and dropped deposits," E Yongjian, a financial analyst with the Bank of Communications, said. "But the rebound of housing transactions prevented the decline from diving."

He forecasted that monetary policy will stay prudent for slower economic growth and potential inflation risks considering the easing impact of the H7N9 avian flu virus.

China's Purchasing Managers' Index for the manufacturing sector fell to 50.6 percent in April from 50.9 percent in March, with 50 percent demarcating expansion from contraction.

E also predicted that the interest rate would stay stable, with little chance of declining, which would cause tension in inflation management and would hardly help cool the rush of capital inflow.

Barclays Bank said Friday in a report that China will maintain its current monetary policy and financial environment.

The report suggested the interest rate would not see huge change in the world's second-largest economy in 2013, but the possibility still remains of an interest cut or a higher limit in the deposit rate.

Chang Jian, an analyst with Barclays on the Chinese economy, said the ongoing monetary and financial policies will continue to sustain the domestic and world economy, the latter of which is recovering slower than expected.

Mild inflation in food and price declines in global bulk commodities allow a more flexible policy of the central bank, Chang said.

With the interest cut fashion sweeping the world, the People's Bank of China may also slightly follow the trend to further promote the Chinese yuan's convertibility under interest and capital accounts, the analyst added.

The bank suggested China curb higher financial risks and asset bubbles with monitoring and regulations on financing products, local financing platforms and shadow banking, as well as proper steering of the real estate market.

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