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FINANCE

China Takes Aim at Excessive Corporate Financing

The China Banking and Insurance Regulatory Commissionto has introduced a new regulation to curb lending to companies that are taking on more debt than what they can repay. Photo: VCG
The China Banking and Insurance Regulatory Commissionto has introduced a new regulation to curb lending to companies that are taking on more debt than what they can repay. Photo: VCG

* Lenders must establish a “joint credit granting mechanism” for a corporate borrower if the company has borrowed over 5 billion yuan ($780 million) combined from more than three banks

* Banking regulator’s regional branches are being asked to each select at least five companies to participate in a trial program to try out the rules

(Beijing) — China will require banks lending to the same company to share information of the borrower and jointly set a limit of the total credit the firm may get, in a bid to rein in excessive financing as the government’s deleveraging campaign rages on.

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