China’s National Audit Office (NAO) found that some Chinese lenders favor corporate borrowers with deposits at their banks or tie their credit offerings to sales of wealth management products, effectively reducing actual business financing, said Caixin.
The State Council asked the NAO to conduct an audit on the enforcement of central government’s 2018 budget. In the NAO’s report issued on Wednesday, it said it found five commercial banks that provided a combined RMB 50 billion ($7.3 billion) of credit that was linked to borrowers’ deposits and purchase of wealth management products.
The auditor, which is responsible for examining the books of government agencies, public institutions and state-owned financial enterprises, also found that three banks illegally collected financing fees of RMB 230 million ($33.4 million) from corporate borrowers.
Since a series of policies to encourage lending to small and private businesses was rolled out last year, banks have been under pressure to reach goals for small business loans while maintaining profits. This has prompted some banks to use disguised ways to boost revenue, such as asking corporate borrowers to transfer their loans into deposits, according to market participants, reported Caixin.
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