China's Banking Credit System Takes Shape

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Last updated at: (Beijing Time) Tuesday, June 10, 2003

China's Banking Credit System Takes Shape

China has made important progress in establishing a nationwide banking credit registration and consulting system, the People's Bank of China said Monday.

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China has made important progress in establishing a nationwide banking credit registration and consulting system, the People's Bank of China said Monday.

The central bank began to prepare for the establishment of the system in 1997. The system had connected all major cities above prefecture level by the end of last year, the bank said.

Companies, institutions and other borrowers except individuals, which conduct credit business with financial institutions, are all required to register their basic credit information in the system, such as their financial situation and whether they have been sued, it said.

Domestic and foreign-funded financial institutions' renminbi and foreign exchange business -- including loans and credit certificate -- are also required to register with the system.

By the end of May this year, about 4 million borrowers, borrowing a total of 11.2 trillion yuan (US$1.3 trillion), were recorded in the system.

Huang Jinlao, a senior researcher with the International Financial Research Institute under the Bank of China, said the establishment of the system was crucial for preventing financial risks.

"Chinese commercial banks will have to reduce the amount of non-performing loans, because more and more foreign financial institutions have come to China,'' he said.

Commercial banks themselves should step up business supervision and risk control measures, Huang said.

The system enables banks to know more about borrowers, the central bank said.

It also provided reliable information for financial supervision departments, it said.

Figures from the central bank suggest that financial institutions accessed the system more than 2.7 million times in 2001, an increase of 53 per cent compared with the previous year.

By the end of May this year, financial institutions had read information about more than 60,000 customers.

The system helped prevent 9,616 times of possible risk credit between September 2002 and April 2003.

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