New directive tightens property loans
By Zhang Yu (China Daily)
Updated: 2006-09-07 11:04 Close ties between commercial
banks and the property industry have aroused the Government's attention.
The central bank's Shanghai branch issued a directive on Tuesday, requiring
all financial institutions to tighten property lending management and optimize
the lending structure to stabilize Shanghai's monetary credit.
"There are several problems during the process of lending money to clients
that need to be addressed," said the directive.
The major problem lies in "the quickened pace of providing loans, with the
growth rate jumping from 9.4 per cent by the end of April to 12 per cent by the
end of July."
Meanwhile, commercial banks' ties with the property industry "lead to the
fluctuation of lending since the growth of lending is closely related to the
property trading volume."
At present, all commercial banks must focus "on the market conditions of the
property industry and the effects of macro-control moves, further improving the
risk management of providing a loan, and properly dealing with the problems
caused by deferred payment."
At the same time, the Shanghai branch asked all financial institutions to
"address the quality of property developers' financial chains and make good
preparation to defend the risks."
"Urban infrastructure construction" and "land reserves" are considered by the
Shanghai branch to be the two most risky areas to offer loans. All the financial
institutions are required to address the potential risks within these two areas.
As for the personal housing mortgage, commercial banks are encouraged to
create new lending products for house purchases to support reasonable housing
consumption.
(For more biz stories, please visit Industry Updates)
|
