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China Facts: crackdown on shadow banking to continue during 2018

 

 

The crackdown on shadow banking launched by Beijing in 2017 will extend into the new year. Rules by the China Banking Regulatory Commission bar banks from making decisions for companies issuing entrusted loans, and from providing guarantees for those loans. They also stop the loans from being used to buy equities, bonds or derivatives by the company borrowing. Entrusted loans are loans made from one company to another in what has come to resemble banking activity but without the same level of risk controls that licensed lenders exercise when making credit decisions. *) The curbs trying to reduce shadow banking is very positive in deed. Hopefully People's Bank of China also tries to tackle the current challange for private companies trying to obtain loans from the official banking sector! 

 

 

 

*) Financial Times 9th January 2018

 

 

 

 

 

 

 

 

 

 

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