China Daily

Banking regulator to tighten loan oversight

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China’s top banking and insurance regulator has issued a circular to tighten management of loans and guard against extending loans to organizati­ons and individual­s involved in organized crime.

As the China Banking and Insurance Regulatory Commission has made it a regular task to combat criminal syndicates, banks and financial institutio­ns are required to pay attention to borrowers that may use loans to engage in organized crime, including loan-sharking or other illegal activities, the commission said in a notice released on July 13.

It also stressed regulating business cooperatio­n with third parties, saying that core business affairs such as credit review and risk control must not be outsourced. In addition, banks are not allowed to provide funding to unqualifie­d lending organizati­ons, and co-financed lending with such organizati­ons is also prohibited.

To tighten management over debt collectors, the commission also required banks and insurance institutio­ns to not authorize organizati­ons or individual­s involved in organized crimes to collect loans as third parties on their behalf.

According to the notice, banks and insurance institutio­ns should also establish a regular working mechanism to recognize the risks of fraud faced in key business sectors.

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