What’s new: The banking regulator in Shanghai has identified 339 million yuan ($51.8 million) in business and consumer loans that were allegedly misused to buy homes in recent special checks on 16 banks as authorities have launched a clampdown on illicit borrowing in the housing market.
Some individual loans that are meant to be used to for business purposes or spent on consumer goods and services were illicitly used by borrowers as down payments for homes, the Shanghai office of the China Banking and Insurance Regulatory Commission said in a Wednesday statement (link in Chinese).
The context: Last month, three central government departments told localities and banks to launch a nationwide inspection targeting borrowers’ illicit use of individual or corporate business loans in the housing market and to step up a crackdown on such violations.
Illegal use of business loans in the housing market has an impact (link in Chinese) on the effectiveness of property policies and crowds out credit that should be used in the real economy, especially for small and micro enterprises, they said in a statement.
The banking regulators in Shenzhen and Beijing have also launched similar investigations into bank loans that were used inappropriately.
Related: China Tightens Crackdown on Illicit Borrowing for Property Speculation
Contact reporter Guo Yingzhe (yingzheguo@caixin.com) and editor Marcus Ryder (marcusryder@caixin.com)
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