China tells banks to check loans being used properly

SHANGHAI: China's banking regulator has ordered banks to conduct checks to see whether any of their loans have illegally gone into the stock or property markets, a banking source told Reuters on Monday Feb 1, the latest move in a clampdown on excessive bank lending and rising asset prices.

The China Banking Regulatory Commission (CBRC) said that one of the focuses of the checks would be on whether developers had used loans that were intended for developing property projects to stockpile land instead, said the source, who had seen the relevant notice from the regulator.

Credit found to be used for improper purposes must be withdrawn within a certain period of time, the source said without elaborating.

"The CBRC has recently found that some banks have loosened management of their lending practices, some industrial companies have illegally used bank credit to invest in stocks and property, while some individuals have used consumer loans to trade stocks," he said. - Reuters