(Updates with name of CBRC official, background)
BEIJING, June 6 China will further tighten
supervision over the shadow banking sector, the country's
banking regulator said on Friday, part of an ongoing campaign to
control off-balance sheet lending by the country's financial
However at the same time, the China Banking Regulatory
Commission will continue to support buyers of affordable
housing, first-time home buyers and small- and medium- sized
businesses amid signs of a slowing economy.
"Currently, the economy, broadly speaking, is stable. But
downward pressures are relatively significant which is a
reflection of ... imperfect financing structures, inefficiencies
in finance allocation and use and difficulties with SME (small
and medium enterprises) financing," a press release circulated
at the CBRC's conference said.
Wang Zhaoxing, a vice president at the China Banking
Regulatory Commission, told a news conference that the regulator
will improve ways to manage deposit-to-loan ratios, an indicator
of a bank's ability to absorb risk, and classify bad loans.
The term shadow banking refers to off-balance sheet lending
by banks and any financing provided by a non-bank entity, such
as credit guarantee firms, trust companies and other lenders,
including pawn shops, for Chinese borrowers.
The government has been trying to rein in the riskiest forms
of non-bank credit, which has grown rapidly in China since 2010,
afraid that the funds were being used to roll over bad debt and
exacerbating asset price bubbles in real estate and industrial
However, Beijing does not want to eliminate all forms of
shadow banking, as they can also play a positive role in
allocating and pricing capital, while also helping diversify
funding channels in an economy historically over-dependent on
bank lending for finance.
Indeed, the growth of total social financing -- a home-grown
indicator that measures shadow banking as well as traditional
lending -- slowed in April, highlighting the risk that efforts
to restrain high-risk lending could have knock-on effects on
healthy credit growth if not handled correctly.
The shadow banking sector may be worth up to 27 trillion
yuan ($4.32 trillion), a figure accounting for nearly a fifth of
the nation's banking sector, according to a recent report by the
Chinese Academy of Social Sciences.
The International Monetary Fund said in April that reining
in China's shadow banking sector is crucial to global efforts to
prevent the risk of a prolonged world slump.
China's central bank pledged in March to improve its
monitoring of the shadow banking sector, as part of an effort to
make its data on bank credit and interest rates more accurate.
CBRC will improve credit asset securitization, and plans to
maintain steady monetary policy and make minor adjustments as
needed, it added. Wang added that the regulator will continue to
oversee online financing to ensure it develops in a healthy way.
($1 = 6.2548 Chinese Yuan Renminbi)
(Reporting by Shen Yan and Jonathan Standing; Writing by Engen
Tham; Editing by Kazunori Takada and Simon Cameron-Moore)