China’s banking regulator has announced that it will team up with the housing ministry to drive domestic lenders to provide greater financial support to the development of welfare rental housing.
The China Banking and Insurance Regulatory Commission (CBIRC) and the Ministry of Housing and Urban-Rural Development (MOHURD) recently issued the “Guidance Opinions in Banking and Insurance institutions Supporting the Development of Welfare Rental Housing” (关于银行保险机构支持保障性租赁住房发展的指导意见), according to state-media reports from 28 February
CBIRC said that the Opinions are for the purpose of “strengthening financial support for the construction and operation of welfare rental housing,” which will be “guided by the market and have controllable risk as the precondition.”
Key measures outlined by the Opinions include the exclusion of loans to support the development of welfare rental housing from regulatory assessments of real estate lending levels.
The Opinions make “four main requirements” of financial institutions for the development of welfare rental housing, including:
- Financial institutions employing their respective institutional advantages, including state development banks, commercial banks, insurers and trust companies.
- Understanding the unique features of financial demand for welfare rental housing. Exploring guarantee methods which suit the unique features of welfare rental housing.
- Establishing and improving internal mechanisms. Banking and insurance institutions are required to strengthen organisational leadership, optimise the financial services organisational framework, and improve incentive and restraint mechanisms, to raise the level of professional capability for servicing welfare rental housing.
- Strengthening risk control. Abiding by the principles of prudence, stability and security; effectively performing management of financing entities, effectively grasping project risk, strengthening post-project tracking and management, and strictly guarding the bottom line against risk.
CBIRC said that in future it would “adopt multiple measures to guide banking and insurance institutions to further strengthen financial support for welfare rental housing development,” including:
- Supporting banking sector financial institutions in the issuance of finance bonds, to expand the source of funds for supporting welfare rental housing.
- Loans in relation to welfare rental housing will not be included in regulation of real estate loan concentration.
- Strengthening risk management and control, and effectively preventing related financial risk.