CBRC cautions on surging consumer loans
2017-09-30 From:China Daily By Jiang Xueqing
China's top banking regulator on Friday warned surging consumer
loans may pose potential risks to the country's lending system.
It also cautioned against a fast rise in consumer leverage ratio.
"Banking regulators encourage banks to develop consumer finance
but the business must be operated according to high standards," said
Xiao Yuanqi, chief of the Prudential Regulation Bureau of the China
Banking Regulatory Commission, at a news conference.
"Banks should assess each consumer's repayment ability
comprehensively and authentically, and avoid pushing up the
consumer leverage ratio, and be careful not to increase the risk of a
bubble in certain sectors such as real estate," Xiao said.
"We should learn from the lessons of the subprime mortgage crisis
in the United States."
Recent inspections on banks by CBRC branches and the People's
Bank of China, the central bank, have found that some consumer
loans were used to make a down payment for home purchases or as
an investment, rather than using them for travel, education, home
renovation or to buy consumer durables.
Such misuse of consumer loans is tantamount to violation of banking
regulations, he said.
To get the consumer finance segment back on track, banks must
review consumer loans, track their usage and examine the repayment
ability of borrowers, he said.
Latest half-yearly financial results showed that many commercial
lenders in China have made retail banking a strategy to transform
their business, due to a decrease in high-quality corporate borrowers,
a boom in the fintech sector and tightening financial risk controls in
the first half of this year.