Money

China to examine bank loans, tighten licenses this year

(Agencies)
Updated: 2011-04-18 15:14

China's banking regulator will launch a thorough examination this year of loans extended over the past few years, and will tighten the issuance of banking licenses in response to global easing of liquidity, the Shanghai Securities News reported on Monday.

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Chinese banks must conduct due diligence on their businesses and report any potential risks to the China Banking Regulatory Commission (CBRC), the newspaper reported, citing CBRC chairman Liu Mingkang.

The regulator will pay keen attention to "shadow banking" businesses as well as off-balance-sheet banking activities involving deals with trust companies in a bid to prevent the type of excessive leveraging that brought down Lehman Brothers, the article cited Liu as saying.

Financial innovation should be based on demand from the real economy, rather than on financial models alone, and should not only benefit the banks selling such products, Liu was quoted as saying by the newspaper.