Chinese Central Bank Targets Concentrations of Real Estate Lending


China’s central bank and its top banking regulator have jointly launched a new system to regulate the concentration of real estate lending amongst banking sector financial institutions.

The People’s Bank of China (PBOC) and the China Banking and Insurance Regulatory Commission (CBIRC) have launched a new “banking sector financial institution real estate loan concentration management system” (银行业金融机构房地产贷款集中度管理制度) which came into effect on 1 January 2021.

Under the system the “real estate loan concentration” of Chinese banks – defined as the real estate lending balance and personal home mortgage balance as a share of all renminbi lending by a bank, will need to satisfy requirements set by PBOC and CBIRC.

These requirements will vary depending upon the asset scale and category of banking sector finance institutions, and be subject to adjustment by regulators.

Real Estate Loan Concentration Requirements for Chinese Banks

 Category of banking sector financial institutionMaximum real estate loan share Maximum personal mortgage share
 Category 1: Large-scale Chinese-invested banks
 ICBC, China Construction Bank, Agricultural Bank of China, Bank of China, Bank of Communications, Postal Savings Bank of China, China Development Bank 40% 32.5%
 Category 2: Medium-scale Chinese-invested banks
 China Merchants Bank, Shanghai Pudong Development Bank, China CITIC Bank, Industrial Bank Co., China Minsheng Bank, China Everbright Bank, Huaxia Bank, Exim Bank of China, Agricultural Development Bank of China, Guangfa Bank, Ping An Bank, Bank of Nanjing, Bank of Shanghai, Bank of Jiangsu, Hengfeng Bank, Zheshang Bank, Bohai Bank  27.5% 20%
 Category 3: Small-scale Chinese-invested banks or non-county rural cooperatives
 Municipal commercial banks, private banks.  22.5% 17.5%
 Rural cooperatives in large and medium-sized cities and urban areas 22.5%  17.5%
 Category 4: County rural cooperatives
 County rural cooperatives 17.5% 12.5%
 Category 5: Village banks
 Village banks 12.5% 7.5%

Regulators have provided a transitional period for satisfaction of the requirements, with those exceeding the ceiling by under 2 percentage points given two years to bring their ratios into line from the date of implementation, and those in excess of 2 percentage points given four years.