China To Monitor Working Capital Loans
Source: Agencies |
July 31, 2009, Friday
|
Print Edition
Print Edition
CHINA'S banking regulator yesterday said it would strengthen its controls over loans made by banks for corporate working capital to ensure the money is put to proper use.
It was the second time this week that the China Banking Regulatory Commission focused its sights on managing loan use, having targeted fixed-asset investment lending on Monday.
The working capital loan rules are still in draft form and soliciting public opinions until August 26.
The CBRC said banks must ensure that the loans are given for a specific purpose for amounts of more than 10 million yuan (US$1.46 million).
The regulator said banks should stop lending if a borrower's credit worthiness declined or if loans were misused.
"Lenders must agree with borrowers on a defined and legal use of the loans, and check on the use of working capital loans to avoid appropriation," the banking regulator said.
It was the second time this week that the China Banking Regulatory Commission focused its sights on managing loan use, having targeted fixed-asset investment lending on Monday.
The working capital loan rules are still in draft form and soliciting public opinions until August 26.
The CBRC said banks must ensure that the loans are given for a specific purpose for amounts of more than 10 million yuan (US$1.46 million).
The regulator said banks should stop lending if a borrower's credit worthiness declined or if loans were misused.
"Lenders must agree with borrowers on a defined and legal use of the loans, and check on the use of working capital loans to avoid appropriation," the banking regulator said.
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