Banks tighten belts on personal loans
- Source: Global Times
- [15:31 March 10 2010]
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By Tang Zhao
Shanghai banks are tightening their criteria for clients applying for short-term bank loans and some of them have even suspended personal loan business altogether after local authorities suggested that they reduce unnecessary financial risks on Monday.
“We have temporarily suspended all the applications for short-term personal loans, including loans for housing decorations and car purchases,” a staff member with the personal banking department at the Shanghai Pudong Branch Industrial Bank told the Global Times Monday.
“It is very difficult to get approval for our personal loan products,” said a staff member with the personal loan business department of China Merchants Bank Shanghai branch.
China Banking Regulatory Commission (CBRC) Shanghai Office released a statement Monday that commercial banks in Shanghai should, “lend funds in accordance with regulations and strictly control the credit funds risks of misappropriation”.
The four major state-owned commercial banks, namely China Construction Bank, Bank of China, Agriculture Bank of China, and China Communication Bank, rarely provide short-term bank loans for individual clients in Shanghai.
“Those personal loans which do not require any collateral can bring high risk, and major banks don’t have to bear such high risks in order to attract more customers,” said an official with the China Communication Bank Shanghai.
Bank regulators in Shenzhen found 13.4 million yuan ($1.96 million) of non-collateral personal loans invested in stocks, according to a report by the Securities Times in late February.
Those loans were granted by seven commercial banks, including China Merchants Bank, Shenzhen Development Bank and Guangdong Development Bank, and Shenzhen Rural Commercial Bank.
