China's banking regulators have banned commercial banks from
giving loans for stock investment and to investigate and call in
all loans suspected of being used for such investment.
The China Banking Regulatory Commission (CBRC) would dispatch
officials to examine loans at all commercial banks after the Spring
Festival, which will fall on Feb. 18, said an official with the
China Banking Regulatory Commission, who declined to
identified.
"The investigations will focus on property loans," the official
was quoted as saying by Tuesday's China Securities
Journal.
The bullish stock markets had driven more people to seek bank
loans for investment under the pretence of a home purchase or
decoration.
The CBRC ordered the banks to call in such loans as soon as they
were found being invested in stocks, the official said.
Bank managers who approved such loans would be harshly
penalized, but he would not elaborate on the penalties.
"The ban and investigations will help prevent investment bubbles
developing on the stock markets," said Zuo Xiaolei, chief economist
at Galaxy Securities.
Zuo said the loans also were considered high risk because they
could be easily lost in the stock markets.
However, many bank officials acknowledged they had difficulty in
tracking the loans if the clients took them out in cash.
(Xinhua News Agency January 30, 2007)