The Bank of China (BOC), one of the country's four major State commercial banks, increased its lending capacity for the construction of infrastructure facilities last year.

The shift led to a much higher rate of infrastructure loans of the total lending volume in the bank, as well as a more balanced lending structure in line with the State's economic policy, bank sources said.

Loans granted by the bank to the infrastructure sector totalled 255.7 billion yuan (US$30.8 billion) by the end of last year. New loans flowing into the sector comprised 45 per cent of the bank's new lending in 1999, the sources said.

Bank officials said the increase in lending strength was in pace with the bank's efforts to guard against potential financial risks stemming from the sizable lending volume.

BOC designated its lending layout, especially lending towards key projects and regions, on the basis of previous investigations into the infrastructure sectors.

The loans primarily supported the construction of road transportation, power and telecommunications, the bank sources said.

Also, to avoid excessive lending to one or two specific sectors or clients, BOC established a risk-control system and granted stricter supervision over loan projects, under which loans will be withheld if the risk surpassed the predetermined volume.

As a result of the efficient handling of loans and risk control, the bank witnessed obvious improvements in lending project quality last year, the sources added.