China's bank regulator has called on the nation's banking sector step up risk management and strengthen compliance as explosive credit growth is leading to greater risks.
"With bank loans growing rapidly, all kinds of risks are rising in the banking industry," Liu Mingkang, chairman of China Banking Regulatory Commission, said in the statement posted on the commission's wensite yesterday.
"Financial institutes in the banking industry must do their utmost to uphold the standard management limits and strike a solid basis for risk management."
In an effort to counter the global financial crisis, Chinese banks issued 8.15 trillion yuan (Bt40 trillion) in new loans in the first eight months of the year, exceeding a 5-trillion-yuan target set for 2009.
The aggressive lending has sparked concerns that some of the money has not been used to help the real economy, but has instead been put into asset markets for quick profit.
The country's stock market surgeud 90 per cent in the first seven months of this year before tumbling nearly 20 per cent in the past month as policy-makers urged a slowdown in credit. Home purchases in major cities also hit record highs in recent months.
Besides ordering the banking industry to set up compliance with regulatory rules, Liu also wanre dof upcoming changes in international finance regulation standards, the statement said.
Policymakers have acknowledged concerns that asset bubbled may be building up.
But Su Ning, the central bank's vice governor, recently said that China would continue to implement and "appropriately loose" monetary policy into next year as the economy is still in a critical stage of recovery.
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