CBRC Designated Three Red Lines For Local Financing Platform Loans

Potential risks of credit risk in real estate market may rise

The 2009 annual report released by the China Banking Regulatory Commission 15 showed that with the gradual increase of uncertainty in the real estate market, credit risk risks may rise.

Some banks' financial institutions have greater credit for local financing platforms at all levels, and credit risks of local financing platforms are hidden.

In addition, the CBRC requires banking financial institutions to firmly guard against three red lines in local financing platform loans.

The CBRC said that with the rapid growth of the scale, the loan of the local financing platform appeared some unsatisfactory situations. Some banking financial institutions had a larger total credit to the local financing platform, and the concentration degree was relatively high. The loan "three checks" were not strict, and the risk control and control were insufficient, and the potential risks increased.

At present, in view of the risks of local financing platform, the CBRC has asked commercial banks to comprehensively assess and effectively guard against the risks of local financing platform. In accordance with the requirements of "open by package, check by one by one, re evaluate, rectification and preservation", we should do well in the risk management and control of local financing platform loans. We should accurately classify and provide sufficient provisions, and basically complete the verification of bad debts, so as to achieve "accounts, cases, and rights".

In addition, the CBRC requires banking financial institutions to firmly guard against three red lines in the loan of local financing platform, that is, to strictly prohibit the issuance of bundled loans, and to sign no large project credit cooperation agreements with local governments. It is necessary to strictly restrict the loans for financing platforms with poor investment, governance structure, internal control, risk management and fund management system, and immediately negotiate specific measures for risk prevention.

In view of the fact that in recent years, the price of real estate in some cities has been rising too fast and the hidden risks of real estate credit have increased, the CBRC requires the banking financial institutions to strictly control the ratio of the first payment of loans, to determine the loan interest rate according to the risks, to supervise the implementation of personal loans, to interview and sign visits and visit the system, to strictly restrict the speculation and speculative buying of houses, to strengthen the supervision and inspection of the real estate enterprises' capital in place, to implement and supervise the credit of real estate development enterprises, to give unified credit, to prevent long credit, and to strictly prohibit the provision of any form of credit support to real estate developers with serious violations of laws and regulations.