The People's Bank of China (PBOC) pulled out a net 86 billion yuan ($13.50 billion) from the banking system this week, according to Reuters' calculations.

Banks must make regular payments on the 5th, 15th and 25th of each month in order to fulfil their reserve requirement ratios (RRRs), with the amount of the payment adjusted in line with the current balance of deposits. As this 5th falls on a Sunday, banks will pay the money on August 6th.

"Money conditions are not too bad, but the willingness to lend money is weak given to the RRR payment," said a dealer at a Chinese commercial bank in Shanghai.

Dealers expect the money rates to fall slightly after the RRR payment is made.

China's central bank injected 50 billion yuan into the money markets through seven-day reverse repurchase agreements on Thursday after it injected only 8 billion on Tuesday, resulting in a net drain as reverse repos issued last week matured.

The benchmark seven-day weighted-average bond repurchase rate rose 7.13 basis points to 3.4831 percent from 3.4118 percent. The shortest overnight repo rate fell to 2.5472 percent by midday from 2.6279 percent at Wednesday's close.