After India, it is the turn of China to warn banks to moderate credit growth. The country’s bank regulator has warned 10 commercial lenders about the risks involved in credit growth amid expectations Beijing will move to rein in the country’s roaring economy, state media reported on 23 April 2007.
The 10 banks are China Construction Bank, Bank of Communications, Bank of China, Merchants Bank, CITIC Bank, Shanghai Pudong Development Bank, Minsheng Bank, Industrial Bank, Huaxia Bank and Zheshang Bank, the 21st Century Business Herald said.
Liu Mingkang, chairman of the China Banking Regulatory Commission, warned of “rather fast growth in credit during the first quarter by commercial banks,” the report said.
“We must analyse the reasons behind the fast expansion of credit and see if it is justified,” the paper quoted Liu as saying at a teleconference attended by bankers and regulators on 19 April.
Figures from the central bank showed that in the first three months of this year, new local-currency denominated loans reached 1.4 trillion yuan (Rs7,50,000 crore), increasing by 167.8 billion yuan from a year earlier.
China’s economic growth accelerated to 11.1% year-on-year in the first quarter of the year, stoking fears of overheating in an economy that has boomed on excessive liquidity and robust growth in fixed assets investment.
The government has also expressed fears of inflation with the consumer price index surging 3.3% in March, above the government-set inflation target of 3% for the year.
According to the report, Liu urged commercial banks to be cautious in issuing credit and step up risk management to ensure that bank-lending be in line with the central government’s macro-economic control measures.