Chinese banks to be punished for risky lending
China has issued a rare warning that it will impose curbs on banks unless they beef up their defences against bad loans as Beijing tries to put the brakes on a massive lending spree.
Banks that fail to comply will face "restrictions on market access, overseas investment, and outlets and business expansion," the China Banking Regulatory Commission (CBRC) said in a statement posted on its website late Monday.
The warning comes after the nation's banks lent a record amount of money this year following government calls to boost the economy in the face of the global financial meltdown.
China's banking laws have set the capital adequacy ratio -- the amount of capital banks must hold against their risk -- at a minimum of eight percent.
The prospect of the regulator baring its teeth as it tries to control credit sent the benchmark Shanghai Composite Index down by 3.5 percent at its close Tuesday, the biggest single-day fall in nearly three months.
It also had an impact on the Hong Kong bourse, which ended the day 1.53 percent lower.
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