Banks warned of big volatility in lending

(Xinhua)
Updated: 2009-11-23 22:32

BEIJING: China's banking regulator on Monday asked the country's commercial banks to better manage risks and avoid year-end volatility in lending.

Commercial banks should ensure that lending increase was kept in a stable and sustainable pace, the China Banking Regulatory Commission (CBRC) said.

Financial institutions with low capital adequacy ratio and no practical remedy plans would face restrictions in various sectors such as overseas investment, branch increase and business expansion, it said.

The CBRC called for enhanced inspections in financial system to detect problems after surging loan extends between the fourth quarter last year and the second quarter this year.

In October, new yuan-denominated loans in October were down 51 percent from September, according to statistics from the People's Bank of China, the central bank.

China's yuan-denominated loans in the first 10 months this year totaled 8.92 trillion yuan (1.31 trillion US dollars), far exceeding the government's target of 5 trillion yuan for this entire year.

The CBRC denied media reports which claimed that the banking regulator would impose lending controls on commercial banks and require big lenders to increase the capital adequacy ratio to 13 percent, compared with the current 11 percent on average.

"There is no such requirements from the CBRC," it said in a statement on its website.