Banking News
- Chinese commercial banks warned not to sacrifice credit control for high profits
Date: 17-Sep-2007 Sources: (Xinhua Online)
BEIJING, Sept. 15 (Xinhua) -- China's central bank vice governor Wu Xiaoling said commercial banks should not pursue higher profits via extension of loans against the backdrop of excessive liquidity.
Commercial banks with too much loans are at the risk of huge losses, once the economy is hit by fluctuations that undermine the repayment abilities of individuals and enterprises, Wu was quoted as saying by Sunday's Shanghai Securities News.
Chinese commercial banks lacked a sense of social responsibility for failing to comply with the guidance of the central bank in credit control and helping puff up the capital market, said Wu, adding that banks played a unique role in the capital market as they create credit money in the process of financing.
Statistics show new loans totaling 3.08 trillion yuan (409.6 billion U.S. dollars) were approved in the first eight months this year, and the figure is close to 2006's total loans of 3.18 trillion yuan (422.9 billion U.S. dollars).
The Chinese government has set it an important goal of its current macro-control policy to rein in excessive liquidity.
The nation raised its benchmark one-year interest rates for a fifth time this year on Friday, and elevated the reserve requirement ratio for a seventh time last Thursday to curb excess liquidity.
China's money supply growth slowed down in August, according to its latest financial report. Market observers said the government's series of macro-control policies to curb the excess liquidity have begun to take effects.
However, it is still difficult for the central bank to absorb the excessive liquidity all on its own.
Wu called on the commercial banks to give a balanced credit support throughout the year, and make loans rigorously according to the needs of the national production.
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