The China Banking and Insurance Regulatory Commission has commenced nationwide on-site assessments of the riskier lending practices of Chinese banks, according to sources speaking to Reuters.
CBIRC’s local branches have reportedly dispatched officials to commercial banks to conduct on-site inspections of bank loans and client data for periods of at least a week.
According to the sources the inspections by CBIRC will focus in particular upon consumer lending, as well as real estate lending in cities where household leverage has risen to high levels.
Officials will scrutinise credit cards and loans collateralised with residential property, as well as any illicit use of consumer financing for mortgage payments.
The move arrives over a year after the now-defunct China Banking Regulatory Commission launched a “regulatory windstorm” on the banking sector and a crackdown on shadow banking activity, as part of broader efforts to deleverage the Chinese economy and prevent systemic risk.
CBIRC has flagged continued scrutiny of financial risk in 2018, highlighting a total of 22 focal areas in a notice issued to local bureaus and banks around China in January.