Data from China’s peak body for the banking sector points to robust growth in consortium loans by Chinese lenders, as well as called for their greater use to improve credit extension to private enterprise.
Aggregate consortium loans provided by banks in China hit 6.97 trillion yuan in the first half of 2018 for an increase of 8.87% compared to the end of 2017, according to data from the China Banking Association (CBA).
Most of these funds were directed towards shantytown overhauls, transportation and warehousing, public utilities, manufacturing and compensatory housing.
Pan Guangwei, CBA vice president, said that consortium loans have seen steady growth in China over recent years, serving as a vital adjunct to the country’s economic development while helping to spread the risk of credit extension and foster the sharing of information and expertise between banks.
According to Pan consortium loans enable banks to pool their respective advantages in different areas and exchange information, while the establishment of a platform for the sharing of big data could also help lenders to conduct cross-checking and share customer resources.
CBA is currently leading trials of a joint credit extension mechanism to facilitate consortium loans, with 443 enterprises already signed up for the scheme.
Pan called for Chinese banks to become more involved with consortium loans in order to expand credit extension to private enterprise, with an especial focus on Belt and Road-associated projects.