Supply-chain finance curbs stressed

China's banking and insurance regulator recently issued guidelines that require banking and insurance institutions to offer comprehensive financial solutions to companies in the upstream and downstream of a supply chain based on real business transactions, making a new effort to tighten regulation of supply-chain finance.

The guidelines, issued by the China Banking and Insurance Regulatory Commission, require banking and insurance institutions to stick to the principle of ensuring the truthfulness of transactions to prevent fabricated financing through falsified transactions, reported Caixin Media, a Beijing-based media group providing financial and business news.

The regulator reportedly stressed that banks should ensure that they acquire first-hand, original transaction data from the borrower and its partner that helps enhance its credit. Banks should also adhere to comprehensive risk surveillance by monitoring risks associated with not only the lead company in a supply chain, but also companies in the upstream and downstream of the supply chain, according to the CBIRC.