BEIJING/SHANGHAI Jan 6 China's cabinet has
issued new rules to strengthen regulation of the shadow-bank
lending that has helped fuel an explosion in debt levels since
2008, in the latest effort to address growing financial risks,
sources told Reuters on Monday.
The wide-ranging new rules issued by the State Council,
China's cabinet, say that shadow banking is a "beneficial" and
"inevitable" consequence of financial development and provides
an official definition of the term, according to a copy obtained
The regulations contain new restrictions on banks'
cooperation with trust companies, securities brokerages and
other intermediaries with whom banks have cooperated in order to
carry out off-balance sheet business.
Authorities also attempt to address the problem of banks'
exploiting regulatory loopholes by clarifying the
responsibilities of various regulators, the People's Bank of
China, the China Banking Regulatory Commission, and the China
Securities Regulatory Commission.
The rules also address internet finance, micro-lending, and
informal lending by friends and family members.