Regulator further improves joint credit granting to prevent risks

The China Banking and Insurance Regulatory Commission said on Friday it has recently issued a notice on further improving the pilot program of joint credit granting to effectively prevent and defuse financial risks, as well as guide banking institutions to strengthen credit management and optimize the allocation of credit resources.

The regulator said it aims to stop companies from obtaining financing from multiple banks or obtaining excessive financing, in addition to achieving the goal of preventing banks from concentrating their credit resources on a small number of large enterprises.

In 2018, the CBIRC issued the trial measures for the administration of joint credit granting by banking institutions and conducted a pilot program of joint credit granting.

Based on the summary of the previous experience, the regulator further proposed the requirements for deepening the pilot program by combining the experience with new situations and fresh problems.

According to the latest notice, the CBIRC local offices should consult with local banking associations to determine the local list of enterprises, and support banks to establish joint credit granting mechanisms with as many enterprises on the list as possible.

For enterprises on the list that have not established a joint credit granting mechanism, banks are encouraged to share information on them through multiple channels, and reasonably provide financing based on a prudent assessment of their actual needs to avoid excessive lending.

The CBIRC urged banking institutions to strengthen information sharing, enhance the risk early warning efficiency, improve risk disposal plans, and raise the level of risk prevention and control.

At the same time, they should improve the credit management process, strengthen asset quality monitoring, and perform independent loan reviews, rather than blindly rely on the risk control standards of other banks, said the regulator.