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Central bank spells restrictions for lenders
By Zhang Fengming |
March 16, 2011, Wednesday
|
Online Edition
Online Edition
NO more gold bars, shopping cards or cash to draw deposits, or "harsh" punishment will follow, Shanghai banking regulator has told lenders.
Irregularities to lure savings through various means including sending gifts or increasing deposit rate are strictly banned, the Shanghai Bureau of the China Banking Regulatory Commission said today in a statement.
Banks are also banned from waiving commissions on other services to attract clients' deposits, the local banking authority said today.
Banks are banned to assess staff's ability by the volume of deposits they managed to obtain.
Some banks in Shanghai have also required individual mortgage loan clients to make savings deposits or buy wealth management products to boost their performance.
The bureau will make an industry overhaul to assure such practices are dropped.
Banks are under pressure to attract more deposits amid a tighter monetary policy as China shifted its monetary policy from accommodative to prudent this year.
The more savings they can get, the more they can lend. This offsets the central bank's efforts to slow down money supply this year.
China's money supply and lending slowed in February as a tighter monetary policy took hold.
Banks in China extended 535.6 billion yuan (US$82 billion) of new yuan-backed loans in February from January's 1.02 trillion yuan.
M2, the broader measure of money supply, rose 15.7 percent year on year in February, shy of an expected 17 percent increase and also short of the central government's annual target of 16 percent.
New loans totaled 1.57 trillion yuan in January-February, down from 2.09 trillion yuan in the year-earlier period, when monetary tightening was also firmly in place.
China hasn't disclosed its annual lending target for this year, but economists are expecting 7.5 trillion yuan new loan which was implied by the authority based on a 16 percent money growth. Banks in China extended 7.95 trillion yuan of new loans in 2010, beyond the official target of 7.5 trillion yuan.
Irregularities to lure savings through various means including sending gifts or increasing deposit rate are strictly banned, the Shanghai Bureau of the China Banking Regulatory Commission said today in a statement.
Banks are also banned from waiving commissions on other services to attract clients' deposits, the local banking authority said today.
Banks are banned to assess staff's ability by the volume of deposits they managed to obtain.
Some banks in Shanghai have also required individual mortgage loan clients to make savings deposits or buy wealth management products to boost their performance.
The bureau will make an industry overhaul to assure such practices are dropped.
Banks are under pressure to attract more deposits amid a tighter monetary policy as China shifted its monetary policy from accommodative to prudent this year.
The more savings they can get, the more they can lend. This offsets the central bank's efforts to slow down money supply this year.
China's money supply and lending slowed in February as a tighter monetary policy took hold.
Banks in China extended 535.6 billion yuan (US$82 billion) of new yuan-backed loans in February from January's 1.02 trillion yuan.
M2, the broader measure of money supply, rose 15.7 percent year on year in February, shy of an expected 17 percent increase and also short of the central government's annual target of 16 percent.
New loans totaled 1.57 trillion yuan in January-February, down from 2.09 trillion yuan in the year-earlier period, when monetary tightening was also firmly in place.
China hasn't disclosed its annual lending target for this year, but economists are expecting 7.5 trillion yuan new loan which was implied by the authority based on a 16 percent money growth. Banks in China extended 7.95 trillion yuan of new loans in 2010, beyond the official target of 7.5 trillion yuan.
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