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CBRC urges banks to withdraw irregular loans

By Qiang Xiaoji (chinadaily.com.cn)
Updated: 2010-02-03 12:14
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China's banking regulator has urged commercial banks to self-check for illegal lending flowing into the stock and housing markets and withdraw the irregular funds within a set time, the National Business Daily (NBD) reported, citing an unnamed source from a State-owned commercial bank.

China Banking Regulatory Commission (CBRC) urged banks to check whether developers embezzle real estate development loans for land hoarding and whether borrowers use credit for purchasing financial products or as cover cost, the report said.

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China's financial institutions extended 9.59 trillion yuan ($1.40 trillion) in new credit in 2009. It was believed excessive bank lending going into the real estate and stock markets caused the price hike in housing and stocks.

However，one source told the NBD that it is very difficult for the lenders to supervise bank lending as the borrowers can transfer money among different accounts and even to other banks. The banks may also feel reluctant to self-check as they are afraid of loosing clients if they interfere too much with the borrowers' money flow.
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