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- China tells banks to scale back lending to contain financial bubble risks - sources
China tells banks to scale back lending to contain financial bubble risks - sources
Reuters reports that people familiar with the matter said that China's regulators are telling banks to trim their loan books this year to guard against risks emerging from bubbles in domestic financial markets.
The banks, including foreign and state-owned lenders, have received guidance from the central bank in the past few days telling them to restrict the overall size of their lending this year, said three bankers on condition of anonymity.
The China Banking and Insurance Regulatory Commission (CBIRC) is also "seriously" looking into the misuse of business loans to individual borrowers for personal investments, two of them said, which violates Chinese regulations.
China significantly boosted credit support to the economy in 2020 as the COVID-19 pandemic hit, but some individuals spent the money buying properties and stocks, fanning bubbles in the markets, the sources said.
Lending to micro and small businesses by big commercial banks increased 50% last year and is aimed to expand 30% further this year, according to the government report released on Friday. China also asked banks to boost lending and lower interest rates to small businesses in 2020.
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