Chinese lenders are facing tighter reserve requirements as part of efforts by the banking regulator to contain bad loans, Shanghai Securities News reported Friday, citing unnamed sources. In guidelines issued in March, the China Banking Regulatory Commission told banks to set aside more reserves and strengthen oversight of their bad loans by setting annual thresholds for non-performing loans (NPLs) and NPL ratio. In 2013, bad loans by commercial banks were 592.1 billion yuan (US$95.34 billion) and the NPL ratio was 1 percent, up from 492.9 billion yuan and 0.95 percent, respectively, a year earlier. Local regulators should conduct timely stress tests in the sector and banks should adopt contingency plans, the report said.
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