China Economic Review

State regulator launches nationwide inspection into banks’ lending practices

China’s Banking and Insurance Regulatory Commission has opened a large-scale inspection into risky lending by the country’s banks, sources told Reuters, targeting consumer and real estate debt.

Representatives of the commission are visiting commercial banks in regions with high levels of household debt, engaging in week-long audits of lending records and client information.

The sources said that a key aim of the inspection is to assess the quality of consumer lending and whether debt is being used by households to cover other loans such as mortgages.

Despite Beijing’s much-touted deleveraging drive, there are concerns that the housing market is still a hotbed for bad debts, with loans being issued to fund speculation and grow the existing bubble.