Chinese bank lending shrank in April from the previous month, the central bank said Monday, as the government tolerates weaker credit expansion despite the potential impact on economic growth.

New yuan loans extended by domestic banks reached 774.7 billion yuan ($124.2 billion) in April, down 17.6 billion yuan from the same month a year earlier, the People's Bank of China (PBoC) said in a statement.

The April figure was also a sharp decrease from 1.05 trillion yuan in March, previous data showed.

Total social financing, a broader measure of credit, dropped to 1.55 trillion yuan last month from 2.07 trillion yuan in March, the PBoC said.

"In the face of calls for stimulus, China's government appears comfortable with a continued slowdown in credit growth," Mark Williams, chief Asia economist for Capital Economics, said in a research note.

The figures defied market expectations of further monetary easing to boost the weakening economy, after the PBoC in late April lowered the amount of money some rural banks must set aside as reserves.

In its quarterly monetary policy report released last week, the PBoC said it would continue to implement a "prudent" monetary policy and "fine-tune" it when appropriate to provide a stable environment for the domestic economy.

Central bank governor Zhou Xiaochuan also reiterated the PBoC would fine-tune its policy but ruled out the possibility of any massive stimulus at a forum over the weekend, state media reported.

"The government's composure so far is an encouraging sign that policymakers are still giving priority to bringing credit risks under control," said Williams of Capital Economics.

China's financial markets were rocked by several debt default cases earlier this year, which triggered tighter regulations and credit.