China’s banking regulator has pledged to step up oversight to reduce financial risks, stressing that long-term efforts are needed to resolve some problems plaguing the sector.
In a statement late Saturday, the China Banking Regulatory Commission (CBRC) said its priorities include increasing supervision over shadow banking and interbank activities, Reuters reports.
“Banking shareholder management, corporate governance and risk control mechanisms are still relatively weak, and root causes creating market chaos have not fundamentally changed,” the regulator said.
“Bringing the banking sector under control will be long-term, arduous, and complex,” it said.
There will be stricter punishments for violations in rules on corporate governance, property loans, and disposal of non-performing assets, the CBRC said, adding that it will strengthen risk control in interbank activities, financial products and off-balance sheet business.
China has repeatedly vowed to clean up disorder in its banking system.
In recent months, regulators have introduced a series of new measures aimed at controlling risk and leverage in the financial system, with everything from lending practices to shadow banking under the microscope, Reuters noted.
In January, the CBRC published regulations that put limits on the number of commercial banks that single investors can have major holdings in.
The government is particularly concerned about the massive shadow banking industry, lending conducted outside of the regulated formal banking system.
It fears that a big default or series of loan losses could cascade through the world’s second-biggest economy, leading to a sudden halt in bank lending, the report noted.
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