China’s banking watchdog has asked local branches and banks to thoroughly investigate potential bad loans and credit risks in industries with serious overcapacity, including steel, cement, electrolytic aluminum, flat-panel glass and shipbuilding, the Shanghai Securities News reported Friday, citing internal China Banking Regulatory Commission guidelines. No loans should be issued to new projects in such industries if they have outdated capacity, fail to meet environmental standards or do not have official approval. To encourage these firms to integrate or transfer capacity, loans issued for mergers can be extended for up to seven years, the report said. Syndicated loans are preferred, it said.
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