China’s Banking Regulator Strives to Ensures Funds Reach Real Economy

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The China Banking Regulatory Commission (CBRC) has hit major lenders with a slew of fines as well as released a new set of guidance opinions as part of efforts to direct more capital towards the real economy.

The new opinions require that commercial banks of be aware of as well as take pragmatic measures to correct any complex or unwieldy transactions that ” lead to capital being diverted to from substantial to insubstantial (purposes,) and thus ensure that fund sources flow towards the real economy.”

They also call for commercial banks to “strictly abide by the relevant supervisory and regulatory provisions in relation to credit, interbank, wealth management, note and trust operations, raise the transparency of products and services…eradicate illegal conduct and market malfeasance.”

“In order to create more beneficial circumstances for banks to better service the real economy, regulatory bodies, banking sector financial institutions and banking sector self-discplinary organisations must correct relevant infrastructure and optimise the external environment; strengthen credit information gathering and sharing and spurs for preserving credit, and perfect multi-party cooperative measures for increasing credit and sharing risk,” said CBRC.

The release of the measures coincides with CBRC’s issuance of 25 administrative fines worth a total of 42.9 million yuan to a total of 17 banks, for various market infractions include improper fee collection, channel abuse and regulatory avoidance.

Fine recipients include Bank of Communications Ping An Bank, Heng Feng Bank, Hua Xia Bank, China Merchants Bank and Minsheng Bank.

CBRC has flagged a further crackdown on illegal activity and misconduct within the lending sector, stating that it will focus in particular upon foreign investment, senior management, and collusion with overseas parties.

 

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