Center

Banks clamp down loans misuse

By Wang Zhenghua (China Daily)
Updated: 2007-02-08 08:53

The Shanghai branch of theIndustrial and Commercial Bank of China(ICBC), the nation's largest lender, said yesterday it had realized the potential risk and put forward policies requiring local outlets to strengthen monitoring.

"Before obtaining the loans, borrowers are required to prove how they will use the money and have their records checked for any violation," an ICBC official said yesterday.

If any improper use of loans is found, the lender would terminate the loan immediately and the borrower would have to return the funds, he added. Other banks in Shanghai said they were cautious about the issue.

To help companies and banks reduce risk, a high court in Shanghai threatened to draw up a blacklist of those with bad credit ratings who had ignored court orders for more than six months. Those blacklisted would be barred from buying new homes or obtaining loans.

InBeijing, keeping close track of diverted loans is now policy at Bank of Communications.

Financial intermediaries in Shenzhen, in South China'sGuangdongProvince, carry out checks to combat misuse, particularly for personal loans.

Han Jianbo, deputy director of the wealth management center atChina Merchants Bank's Hangzhou branch, said: "We will keep a close watch on how loans are used."

(China Daily 02/08/2007 page13)