China’s banking regulator has set new rules for the country’s three policy banks to help rein in risks amid a broader tightening of controls over the financial sector.
The new rules require the three banks to strengthen governance systems and to establish capital restraint mechanisms based on capital adequacy ratios, the China Banking Regulatory Commission (CBRC) said in statements late on Wednesday.
The three banks, which include the China Development Bank, the Export-Import Bank of China and the Agricultural Development Bank of China, had not been subject to special regulatory policies since their inception in the 1990s.
Beijing is trying to reduce financial risks by containing rising debt in the banking and corporate sectors, as well as looking to defuse housing bubbles for fear they could derail the economy if not handled well.
The banking regulator said the new measures, which would come into effect from the start of 2018, were necessary to ‘strengthen supervision’ over the policy banks and prevent the emergence of ‘systemic financial risks’.
The state-run Xinhua news agency cited CBRC official Zhou Minyuan saying current regulations were insufficient and that the broadening scope of the policy banks “posed a challenge to risk control”.
The three banks’ total assets stood at 25.12 trillion yuan ($3.79 trillion) at the end of September, Xinhua said, while aggregate loans hit 17.41 trillion yuan.