Since the People’s Bank of China and the CBRC introduced a concentration management system for real estate loans last year, several major cities have seen tighter personal housing loan quotas, longer lending cycles and stricter eligibility checks. Many people then used business loans and credit loans to buy houses, which were recently targeted by regulators and cracked down to stop credit funds from being diverted into the property and stock markets, and fines were issued to banks suspected of “inadequate management”.
According to “China Fund News”, some “personal loan early recovery letter” circulated online recently, the bank asked customers to return all the loan principal and interest in advance, the reason is that the borrower “did not fulfill the relevant provisions of the loan contract ‘loan purpose'”, that is, the borrower to support the development of small and micro enterprises business loans. The reason is that the borrower “failed to comply with the relevant provisions of the loan contract ‘loan use'”, that is, the borrower to support the development of micro and small enterprises business loans, diverted to the real estate market, used to purchase a house or replace the mortgage.
The report said that the significant discount in interest rates for small and micro loans last year made many borrowers use the business loans to enter the property market and flow through multiple channels several times, making it more difficult for banks to check. The Shanghai Banking and Insurance Regulatory Bureau issued a “Notice of the Shanghai Banking and Insurance Regulatory Bureau on Further Strengthening the Management of Personal Housing Credit” at the beginning of the year, requiring Shanghai banks to conduct a comprehensive self-inspection of consumer loans, business loans and personal housing loans issued since June 2020, and to impose disciplinary measures on borrowers who violate contractual agreements. Banks then invested manpower and resources in a comprehensive and strict investigation.
The move will greatly reduce the irregular use of business loan funds for Home purchases and, together with the strict scrutiny on housing loans, will help stabilize Shanghai’s property market, the report said. And in addition to Shanghai, Guangzhou has also begun to strictly investigate the flow of consumer and business loans to the property market. A number of banks nationwide, including Bank of China Taizhou Branch, Zhejiang Linhai Hushang Village Bank, Wenzhou Bank Taizhou Branch, Ping An Bank Taizhou Branch, and Agricultural Bank Taizhou Branch, have been issued fines of RMB 890,000 to 690,000 yuan by the CBRC for “inadequate post-loan management” and misappropriation of credit funds for home purchases and inflows into the securities market. They were both fined between RMB 890,000 and 690,000 yuan by the CBRC for “inadequate post-loan management” and the diversion of credit funds to housing and securities markets.
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