Chinese Banks Tighten Post-Loan Management to Stop Consumers Using Personal Loans to Invest
Zhang Xia
DATE:  Sep 20 2017
/ SOURCE:  Yicai
Chinese Banks Tighten Post-Loan Management to Stop Consumers Using Personal Loans to Invest Chinese Banks Tighten Post-Loan Management to Stop Consumers Using Personal Loans to Invest

(Yicai Global) Sept. 20 -- After China's banking regulator discovered consumer loans were winding up in the real estate market, many of the nation's banks have stepped up post-lending management to ensure compliance and prevent the misuse of consumer loans in property and equity investment.

Local governments in Beijing and Shenzhen called on lenders to self-inspect the use of their loans, and some banks have requested customers supply evidence, such as invoices and receipts, to prove their loan was used for its intended purpose. The lenders analyze fund movement in borrowers' accounts, verify evidence and conduct post-loan customer calls to prevent misuse, Cailian Press reported on Monday.

Commercial banks offer consumer finance loans to individuals looking to purchase products or services. They are not intended to be used for investment in stocks, property or wealth management products.

New short-term household loans worth USD33.3 billion (CNY216.5 billion) were granted in August, data from China's central bank, the People's Bank of China shows. Most of these loans were consumer loans.

However, despite the borrowing spike, consumer lending has decreased, indicating that loans were actually used for other purposes, Sinolink Securities suggested.

Many regions have witnessed unexplained increases in consumer loans since March. The total value of the additional loans is about CNY370 billion (USD56.9 billion), of which at least CNY300 billion has ended up in the property market, making up 30 percent of the total amount of new short-term lending in the period, E-House China said in a recent report.

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Keywords:   Consumer Loans,REAL ESTATE,PROPERTY,Illegal Investment