PBOC Commits to Preventing Loan Funds from Seeping into Property Market, Warns of Organised Criminal Activity in Some Cities


The Chinese central bank has reiterated the need to prevent the illicit use of funds from bank loans for investment in the property market.

Zou Lan (邹澜), head of the People’s Bank of China’s (PBOC) financial markets department, said that the illicit use of bank loans to make property investments had become an issue in certain Chinese cities.

“In some hot spot cities where expectations of home price growth are comparatively strong and the speculative atmosphere is thicker, there has appeared the phenomena of people fraudulently obtaining business loans from banks to use for home purchases, and in some cases this has even involved organised criminal activity,” said Zou.

“If this cannot be promptly contained, not only will it impact the implementation of real estate control policies, it could also squeeze out lending resources for supporting the real economy, and in particular the growth of micro and small enterprises.”

Zou made the remarks on 12 April, at a press conference held by PBOC on first quarter financial data.

The remarks arrive just following the release of 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, jointly issued by PBOC with the China Banking and Insurance Regulatory Commission and the Chinese housing ministry.

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.