Chinese Regulators Tighten Grip on Disguised Loans
(Beijing) — Channel lending in China, albeit sprawling, is still caught in a regulatory no-man’s land.
Chinese banks have been skirting more-stringent requirements on capital and loan-loss provisioning by disguising loans routed through non-banks, or so-called “channels,” as asset-management plans (AMPs).
AMPs fetch high returns from investing in high-risk local government financing vehicles, less-capitalized property projects, or companies whose credit profile is too weak to secure conventional bank loans. These AMP-disguised loans as a result have managed to stay off the radar of traditional debt indicators.
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