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China acts to restrict lending to property developers
28 Mar 2010
In a bid to prevent development getting out of control, banks have been told they must impose stricter lending criteria when dealing with real estate companies, reports Bloomberg Business Week.
The China Banking Regulatory Commission's chairman Liu Mingkang told a conference in Beijing banks need to get tough with real estate developers.
He said banks should refrain from providing bridging loans to property developers that own land but have not begun work at the site, as well as ensuring that no loans of any sort are approved to real estate companies without proper checks being carried out.
"We ask banks to check the qualifications of the developers, and they must have a face-to-face check," the official added.
The China Banking Regulatory Commission has also taken action to prevent some government-owned companies obtaining loans for property developments, reports Dow Jones.
Banks have been told not to advance funds to the 78 companies, as their core business is not real estate development.
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