The China Banking Regulatory Commission made its official debut at the end of May, with a press conference taken by its chairman, Liu Mingkang. The objectives of the commission were defined as protecting the interests of depositors and consumers by prudential and effective supervision, and
accordingly helping to increase public confidence in the sector. The commission would also promote the public understanding of modern finance through education, and try to reduce financial crimes and maintain the stability of financial markets.
Liu said that the reform of China's stateowned commercial banks depended on both internal and outside factors, but most important was internal improvement at the banks. For this the banks would have to improve corporate governance, streamline information technology systems, lend according to commercial criteria and intensify efforts to recover non-performing loans (NPLs).
The commission had set China's big four state-owned banks the target of cutting their NPL ratio by 3-4 percentage points this year. Overall, the banks are supposed to meet an ambitious central bank deadline for reducing their NPL ratio to 15 per cent of total lending by 2005, having cut NPLs to 24.1 per cent at the end of March 2003, down from 26.1 per cent at the end of 2002. Liu also said that the government might help the banks achieve their target by offering a capital injection or a transfer of a tranche of debts off the banksï¿½books. However, he did not say when such measures might be taken.