Bank Wants To Know Where Loans Are Going

By Zhang Dingmin | February 14, 2009, Saturday |

Print Edition

CHINA'S central bank is asking lenders to identify recipients of 1.62 trillion yuan (US$237 billion) in loans made last month as part of a push to stimulate the economy, according to an insider.

The People's Bank of China surveyed banks for details on the recipients and terms of the record new lending, an insider told Bloomberg News.

The central bank is trying to ensure that loans contribute to economic growth.

China's government is putting pressure on banks to support its 4-trillion-yuan stimulus package, while seeking to avoid a pile-up of bad loans.

Default risk represents the biggest threat to Chinese lenders this year, Fitch Ratings said last month.

"The loans have mainly gone to safer medium and long-term lending as well as risk-free discounted bills," said Lu Zhengwei, a Shanghai-based economist at Industrial Bank Co. "That shows banks' risk aversion hasn't eased noticeably."

Finance

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Bank Wants To Know Where Loans Are Going

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