Regulator Tells Banks to Limit New Loans
Source: Shanghai Daily
China’s banking regulator has urged commercial banks to cap loan growth at no more than 15 percent this year as part of the country’s effort to curb its blistering economy.
Bank loans increased nearly 17 percent to 2.54 trillion yuan (US$336 billion) in the first half of this year compared with a year ago, according to the People’s Bank of China. The loan spike is a clear sign that China’s economy is overheated, that instability exists in the financial sector, and it is becoming harder for banks to manage lending risks, Liu Mingkang, chairman of the China Banking Regulatory Commission, was quoted as saying by the 21st Century Business Herald. China’s economy rose 11.9 percent in the second quarter this year, lifting first-half growth to 11.5 percent, the National Bureau of Statistics reported on Thursday. The CBRC said it will urge commercial banks to enhance the loan payment system to better track how credits are used and prevent clients from misappropriating loans. The CBRC said on June 18 that it had punished eight domestic banks for failing to prevent two corporate clients from misappropriating 4.46 billion yuan in loans to invest in the equity market and real estate projects. Liu said the CBRC should redouble its efforts to curb growth in non-performing loans and prevent criminal wrongdoing in the banking sector.
The number of criminal cases involving more than one million yuan each dropped by 76, or 60 percent, in the first six months, he said.
