Credit management rules revised to help real economy

The China Banking and Insurance Regulatory Commission announced revision on Friday of several credit management rules to further help banks to improve their credit management capacity and the efficiency of financial services to better serve the real economy.

The CBIRC is soliciting public opinions on the revised draft rules, which include interim measures for the administration of fixed asset loans, working capital loans and personal loans, and guidelines on the project financing business.

Adapting regulations to new changes in the market, the revisions have been made to enhance the quality and efficiency of the banking sector to serve the real economy. They will also help control financial risks more effectively, the regulator said.

According to the revisions, the CBIRC will encourage banks to conduct due diligence and loan management by using big data and offsite technologies. Banks are allowed to simplify onsite inspections of small businesses' applications for working capital loans as long as the applications meet regulatory requirements.

The regulator will set requirements for the term of working capital loans, fixed asset loans, consumer loans and personal business loans to guide commercial banks to effectively contain the risk arising from excessive maturity mismatch and optimize their loan structures.

It will also allow banks to further improve the methods assessing different types of borrowers' demand for working capital, especially small businesses' demand for credit.

As per the draft rules, lenders and borrowers should agree in the contract on the liability for breach of contract if borrowers use the loans for other purposes. In addition, they should agree on the measures lenders could take in this situation.