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China Further Tightens Screws on Entrusted Loans

China’s regulators are tightening scrutiny over entrusted lending activities. Photo: Visual China
China’s regulators are tightening scrutiny over entrusted lending activities. Photo: Visual China

China is further cranking up its scrutiny on “entrusted loans,” channels that have been used for massive asset management funds to invest in risky borrowers outside the formal banking system.

Entrusted loans – in which a bank acts as an intermediary to arrange and administer financing between a borrower and lender – have become one of the main segments of the country’s “shadow banking” industry.

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