(Shanghai Daily)
Updated: 2007-08-02 09:10

Shanghai's banking regulator said Tuesday that savings account withdrawals more than doubled in the first half, as cash was apparently lured away by the booming stock market.

Bank deposits in Shanghai dropped for four months in the first half of this year, falling by about 120 billion yuan (15.85 billion U.S. dollars) for the period, authorities calculated.

The withdrawals were more than double the 50-billion-yuan figure for the second half of last year, the Shanghai Bureau of the China Banking Regulatory Commission said Tuesday in a statement.

Though the regulator didn't specify the reason for the drawdown, market insiders believe the money was channeled into stocks. Authorities said in earlier statements that bank savings were decreasing against the backdrop of a rising stock market.

The benchmark Shanghai Composite Index has risen 64 percent this year after recording a 40-percent gain in the first half. The index soared 130 percent in 2006.

The regulator said banks should be cautious to avoid the risks of other markets from being transferred into the banking sector. Individuals and companies are banned from borrowing money from lenders for stock market investment.

The regulator has asked banks to strengthen credit checks to make sure they don't issue loans that end up being used for stock trades.

The regulator also said it will support "green credit," which provides lending to energy-efficient and environmentally friendly projects.