China`s cabinet has issued new rules to strengthen regulation of the shadow-bank lending that has helped fuel an explosion in debt levels since 2008, in the latest effort to address growing financial risks, sources told Reuters on Monday.
The wide-ranging new rules issued by the State Council, China`s cabinet, say that shadow banking is a “beneficial” and “inevitable” consequence of financial development and provides an official definition of the term, according to a copy obtained by Reuters.
The regulations contain new restrictions on banks` cooperation with trust companies, securities brokerages and other intermediaries with whom banks have cooperated in order to carry out off-balance sheet business.
Authorities also attempt to address the problem of banks` exploiting regulatory loopholes by clarifying the responsibilities of various regulators, the People`s Bank of China, the China Banking Regulatory Commission, and the China Securities Regulatory Commission.
The rules also address internet finance, micro-lending, and informal lending by friends and family members.
Reuters