[photopress:Money.gif,full,alignright]An investigation by the China Banking Regulatory Commission (CBRC) has revealed that Chinese banks have been providing real estate developers with illegal loans and issued bogus mortgages worth several billion RMB to the end of June 2006, in the knowledge that borrowers had lied about which homes they were buying and the size of their registered capital.
They were also found to have issued more than one mortgage for one home.
The industry regulator conducted nationwide checks on loans for real estate development projects and loans for individual home buyers, which were extended by some branches of major commercial banks.
It found that one state-owned commercial bank — the name was not disclosed — had issued 4,718 loans on bogus mortgages, valued at RMB1.31 billion (US$169 million), which was only 6% of the total loans for home buyers that were checked.
Another state-owned commercial bank granted 3,716 loans, valued at RMB734 million (US$95 million), for individual home buyers, 3.23% of the total credits investigated.
Sources with the CBRC said the total number of suspect loans accounted for nearly 30% of those checked. The document banned the issuance of credit to real estate developers who have inadequate capital and forbid loans to be granted for property development purposes in the name of circulating funds.
Source: Xinhua
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