China Announces Even Tighter Restrictions On Loan Growth
by ilene - February 21st, 2010 2:44 pm
China Announces Even Tighter Restrictions On Loan Growth
Courtesy of Vincent Fernando at Clusterstock/Business Insider

The China Banking Regulatory Commission (CBRC) issued a new post on their website Saturday explaining new regulations aimed at tightening both personal and working capital business loans.
Banks must set a lending quota after "prudent calculation" of borrowers’ "actual demand" and must not lend excessively,
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Banks are also required to improve risk control after granting loans and to be aware of factors that might influence the repaying capabilities of borrowers through inspections and monitoring, the statement said.
For personal lending, the CBRC asked banks to be more sophisticated in the management of the lending process, especially on the use of the loans, according to the regulation.
Borrowers will not be able to obtain loans without declaration of a specific use, and they should meet bank representatives in person to avoid false claims, according to the CBRC.
These new regulations actually went in effect on February 12th, despite the Saturday web site release. It seems the regulator is trying to explain themselves further, or was just slow.
China: Lending Restrictions and Beijing’s Predicament
by ilene - January 21st, 2010 3:05 pm
China: Lending Restrictions and Beijing’s Predicament
Courtesy of John Mauldin, Outside the Box
China has long been a mystery to foreign investors. Deeply involved in trade and commerce since the ancient days of the Silk Road, China has continued to maintain the appearance of closed economic borders and, even past these hardened gates, undeniable risk. Like any investor, you’ve probably been tempted to look at the prospects, and you’ve probably been met with a barricade of warnings about corruption and internal strife that quickly bounces you away. In the case of this sleeping dragon, knowing isn’t half the battle, the battle is in knowing.
I want to share with you my source for what is really going on globally – I get it from my friends at STRATFOR. They’ve got a unique way of measuring past events and analyzing geopolitical foundations to project the future. It’s not investment advice – it’s the geopolitical information you need to understand a region before you evaluate any investment opportunities.
This week I’m including an article with STRATFOR’s take on recent developments in Chinese banking restructuring. Give it a read and sign up for their free intelligence reports here.
John Mauldin
Editor, Outside the Box
China: Lending Restrictions and Beijing’s Predicament
Stratfor Today | January 20, 2010 | 1808 GMT
China Banking Regulatory Commission chief Liu Mingkang at the Asian Financial Forum in Hong Kong on Jan. 20
Liu Mingkang, head of the China Banking Regulatory Commission (CBRC), said in an interview Jan. 20 that several Chinese banks had been asked to restrain their lending after proving to have inadequate capital reserves. Chinese media reports claimed that new bank loans so far in January have risen to as high as 1 and 1.5 trillion yuan ($146-$220 billion) — approaching or equaling the massive hike in January 2009. As a result, several major Chinese commercial banks (whose names were not given) were given oral commands to stop new lending for the rest of the month.
While the regulators will strive to control credit flows, the broader Chinese imperative to maintain growth at any cost contradicts the ability to preserve loan quality and allocate capital efficiently.
Under the guidance of the central government, bank lending — the dominant form of financing in China — has skyrocketed in the past year to spur growth, fend…