China’s Banking Regulator Targets Illicit Flow of Business Loans into Property Market


The China Banking and Insurance Regulatory Commission (CBIRC) has announced a crack down on the illicit flow of funds obtained via business loans into the property sector.

CBIRC, the Chinese central bank and China’s housing ministry jointly issued the “Notice Concerning the Prevention of Loans for Business Purposes Illicitly Flowing into the Real Estate Sector” (关于防止经营用途贷款违规流入房地产领域的通知) on 26 March.

The Notice calls for Chinese banks to strengthen assessments of the qualifications of borrowers, as well as reviews of credit needs, management of loan terms, and strict administration of loans both during and subsequent to their extension.

Individuals and enterprises that are found to have misused business loans for real estate investment will have information on their administrative penalties included in China’s credit system.

CBIRC the Chinese central bank and Chia’s housing ministry will also jointly undertake specialist inspections of the illicit flow of funds from business loans into the property market prior to the end of May, as well as expand the severity of penalties.


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