China's banking regulators have banned commercial
banks from giving loans for stock investment and to investigate and call in all
loans suspected of being used for such investment.
The China Banking Regulatory Commission (CBRC) would dispatch officials to
examine loans at all commercial banks after the Spring Festival, which will fall
on February 18, said an official with the China Banking Regulatory Commission,
who declined to identified.
"The investigations will focus on property loans," the official was quoted as
saying by Tuesday's China Securities Journal.
The bullish stock markets had driven more people to seek bank loans for
investment under the pretense of a home purchase or decoration.
CBRC ordered the banks to call in such loans as soon as they were found being
invested in stocks, the official said.
Bank managers who approved such loans would be harshly penalized, but he
would not elaborate on the penalties.
"The ban and investigations will help prevent investment bubbles developing
on the stock markets," said Zuo Xiaolei, chief economist at Galaxy Securities.
Zuo said the loans also were considered high risk because they could be
easily lost in the stock markets.
However, many bank officials acknowledged they had difficulty in tracking the
loans if the clients took them out in cash.
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