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State banks are put under scrutiny
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China's state lenders including Agriculture Bank of China and China Everbright Bank were found to have issued loans to unqualified borrowers and cut credit on small and middle sized companies, the nation's auditor said amid intensifying pressure of mounting bad debt and cooling economy.
Some 18.23 billion yuan (US$2.74 billion) in loans from six local branches of AgBank were found to have broken rules on making falsified materials during year 2010 to 2014, while Everbright Bank lent out a total 2.56 billion yuan to projects without qualified papers between 2011 to 2014, the National Audit Office said in a statement on its website yesterday.
The announcement was a part of office's 2015 work report on June 29, along with several statements and audit reports for individual companies in various sectors.
A key focus of the office's work last year was revealing violations in the approval, allocation and management of public funds, state-owned assets and resources, the office said in the statement.
Violation were also found on lenders' behavior of credit rationing, as they intend to lend less towards small capital companies and charge higher fees for extra services, the auditor said.
"Those valuations would add operational burdens to enterprises in disguised ways," said the statement. "It lifts the cost for the real economy to borrow."
China's banking system has been blamed for its favor over big companies and ignorance over small borrowers. With the economic growth slowed down to 25-year-low, a cooling profit growth of state-owned enterprises dragged down the performance of lenders as well, with the whole sector struggling between lending cost and risk control.
The auditor also updated the inspection results on three insurers including People's Insurance Company of China, China Pacific Insurance Group Co and China Life Insurance Group Co, pointing out sector’s over-reliance on investment-typed insurance products which only generate premium scales but barely hold actual function on applicants' security.
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