China Fines Four Banks $828,000 for Property Lending Violations
What’s new: China’s banking regulator fined four banks a total of 5.3 million yuan ($828,000) for failure to review personal consumption loans and business loans that were used to buy real estate.
The Beijing branches of Postal Savings Bank of China, China Merchants Bank and China Guangfa Bank, and two branches of Shanghai Pudong Development Bank in Beijing were ordered to immediately take effective measures to improve credit business procedures, recover loans that violated regulations and hold responsible persons to account.
Staff members responsible for the violations were also fined a total of 350,000 yuan, according to Beijing Bureau of the China Banking and Insurance Regulatory Commission (CBIRC).
The investigation of the illegal flow of credit into the real estate market continues, and regulatory authorities will punish violators in accordance with the law, an official at the CBIRC Beijing bureau said.
The background: China is stepping up pressure on financial institutions to control the growth of real estate loans after it imposed a cap on property lending by big banks in December. The moves are part of a campaign to cool a roaring property market and prevent systemic risks in the financial system.
In March, the CBIRC, the Ministry of Housing and Urban-Rural Development and the central bank ordered a nationwide inspection of business loans, targeting borrowers illicitly using individual or corporate business credit to speculate in the housing market.
Inspections found that individuals and businesses tried various ways to evade regulatory requirements. For example, some used bridge funds to buy houses and then applied for business loans to repay the bridge loans. Some borrowers moved business loans through several bank accounts to cover up the use of funds to buy houses.
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