Regulations target entrusted loan use

China's banking authority announces tighter rules to combat systemic risk

The China Banking Regulatory Commission has announced rules to further standardize the management of entrusted loans, strictly restricting the sources and uses of such funding.

The tightened regulations seek to defuse commercial banks' off-balance-sheet risk exposures, and to stop funds from being funneled into the housing sector and local government financing vehicles, according to bankers and academics.