Banking regulator vows to keep property financing in line

Chinese 100 yuan banknotes are seen in a counting machine while a clerk counts them at a branch of a commercial bank in Beijing, March 30, 2016. [Photo/Agencies]

China's banking regulator has instructed banks to control credit growth to the country's booming real estate sector, intensifying caution against an over-heated market.

Banks should ward off concentration risk in property sector, while stemming illegal financing channels, according to a quarterly statement briefed by the China Banking Regulatory Commission (CBRC).

The regulator will streamline sales procedure of asset management products, stressing information disclosure and authenticity check, and regulate cross-financing to ensure risk penetration and sufficient provision, Guo Shuqing, chairman of the CBRC, was quoted as saying.

The directive comes as China is putting a "higher priority on risk prevention" to strengthen financial stability.

Banks are also asked to enhance liquidity risk management, conduct stress test on a regular basis and tame maturity mismatch.

Credit structure has shown positive change, the statement noted. Outstanding loans to small and micro businesses jumped 14.4 percent year-on-year to 27.8 trillion yuan ($4 trillion) in the first quarter, while agriculture related loans rose 8.9 percent to 29.2 trillion yuan.

In all, Chinese financial institutions recorded an outstanding loan of 116.6 trillion yuan by the end of March, increasing 102.6 billion yuan from the same period last year, according to statistics from the CBRC.