China to tighten loan supervision

14:36, December 09, 2009      

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China will increase supervision of lending and step up efforts to improve the quality of loan applications after the lending boom to revive economic growth since the financial crisis, China's banking regulator noted Tuesday.

The China Banking Regulatory Commission (CBRC) will "strictly control lending to industries that are energy-intensive, polluting and have overcapacity, and raise the quality of lending," Liu Mingkang, chairman of the CBRC said in a statement on the commission's website.

Overall, the Chinese government will "increase regulatory supervision," he added.

He also noted that bank loans should play a bigger role in economic restructuring and the country should continue credit expansion at an appropriate pace after record lending this year.

The statement is a response to the annual Central Economic Work Conference, which concluded Monday with a government pledge to maintain fiscal and monetary policies in 2010.

The banking regulator also announced that it will increase financial support to small businesses and the agricultural industry.

More credit support should also go towards promoting employment and industries of strategic importance, Zhou Xiaochuan, governor of the People's Bank of China told an insider meeting.

The central bank will put more effort into stimulating greater rural development and domestic demand, as well as enhance balance of payment, and curb potential financial risks, Zhou was quoted as saying.

Chinese banks lent a record 8.92 trillion yuan ($1.31 trillion) in the first 10 months, far exceeding the government's target of 5 trillion yuan for the entire year, which has resulted in fears of bad loans and unprofitable investments.

Source: Global Times
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