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Audit shows lenders flouted loan process

Update Date:2018-10-12 17:26:46     Source:www.3737580.com     Views:298

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CHINA’S state lenders, including the Agriculture Bank of China and China Everbright Bank, were found to have lent a total of nearly 20.8 billion yuan (US$3.1 billion) to unqualified borrowers, and cut credit for small and middle-sized firms, the nation’s auditor said amid pressure of rising bad debts and a cooling economy.

Six local branches of AgBank were found to have broken rules when they falsified materials to lend around 18.23 billion yuan from 2010 to 2014, the National Audit Office said in a statement on its website yesterday. Everbright Bank lent 2.56 billion yuan to projects without proper documents between 2011 and 2014.

The NAO focused its inspection last year on violations in the approval, allocation and management of public funds, state-owned assets and resources, it said in the statement.

The office said it found the lenders had discriminated against small firms by extending fewer loans to small-capital companies and charging higher fees for extra services.

“The violations would add operational burden on enterprises,” the statement said. “They raise the cost for the real economy to borrow.”

China’s banking system has been blamed for favoring big companies and ignoring small firms. With economic expansion slowing to a 25-year low and profit growth weakening in state-owned enterprises, banks also performed poorly and had to balance between lending cost and risk control.

 

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