CBRC introduces bad-loan ratio requirement

The head of the China Banking Regulatory Commission said banks would be required to raise their bad-loan reserve ratios to 150% by the end of the year, the South China Morning Post reported. The statements by Liu Mingkang are seen to highlight the regulator’s fears of deteriorating asset quality amid huge growth in bank lending. "Rapid growth in banking loans has led to accumulated risks," said Liu. "Reckless operations of banks were seen as some banks rushed to extend loans without due diligence." China has not had a mandatory bad-loan reserve ratio in the past, but most of the country’s banks have already increased their bad-loan ratios to more than 150%. Chinese banks lent out US$1.1 trillion in new loans in the first half of the year.