Banks Urged to Reduce Non-Performing Loans

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Last updated at: (Beijing Time) Sunday, June 02, 2002

Banks Urged to Reduce Non-Performing Loans

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State-owned commercial banks should make sure their non-performing loans drop by two or three percentage points per year, and bring their non-performing loans down to around 15 percent of their total loans by the end of 2006, said Dai Xianglong, governor of the People's Bank of China (PBOC), the central bank.

Addressing a meeting of PBOC branch chiefs here over the weekend, Dai also stressed that beefing up financial supervision is one of the most important tasks this year. He urged further strengthening of the banks' supervisory forces.

By the end of April, outstanding non-performing loans at state- owned commercial banks stood at 24.54 percent of the total loans. The figure was more than one percentage points lower than at the beginning of the year.

Meanwhile, Dai said that broad money (M2) would increase by 14 percent in 2002, one percentage point higher than the target set at the beginning of this year. Meanwhile, narrow money (M1) will increase by around 13 percent.

New lending extended by all financial institutions will exceed 1,300 billion yuan (about 156.6 billion U.S. dollars) in 2002, according to the governor.

He also noted at the meeting that the central bank intends to allow the lending rate to fluctuate by wider margins and within a wider scope.

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