China’s banking regulator and the central bank plan to adopt a more differentiated regulatory system for assessing industrial banks’ capital adequacy and risk management, in a step to higher prevent risks within the country’s economic system.
The China Banking and Insurance Regulatory Commission and the People’s Bank of China on Saturday jointly released amended draft rules that they said aimed to assist banks “constantly improve the precision of risk measurement and guide banks to higher serve the true economy.”
The draft rules, which bring the banking sector closer to global standards, will divide lenders into three groups based on business scale and risk level.
The foundations will apply a differentiated regulatory system to banks. Lenders with a comparatively large scale of assets or relatively large cross-border business might be under stricter capital requirements and can have to reveal more information to regulators.
As well as, the principles will include more specific aspects to measure banks’ risk exposure to mortgage lending, reminiscent of the varieties of property, sources of repayments and loan-to-value ratios.
China’s property market, once a pillar of growth, has slowed sharply over the past yr, hobbled by fragile demand and mounting debt defaults by developers. Seen here is an aerial photo showing Huandianshan Lake villa district in Kunshan city, Jiangsu province.
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China’s property market, once a pillar of growth, has slowed sharply over the past yr, hobbled by fragile demand and mounting debt defaults by developers.
The 2 regulators said implementation of the brand new rules would go away capital adequacy ratios within the banking sector generally unchanged, though the ratios for some banks would change barely.
The commission and central bank are searching for public comment before implementing the changes on Jan. 1, 2024.
