China Stiffens Regulation Of Loan Guarantee Services

According to a circular from the general office of the State Council, China will establish a ministry-level joint meeting on the management and supervision of loan guarantee services.

The joint meeting will formulate policies for the development of loan guarantee services; set up a management and overview system for loan guarantee services; and require local authorities to undertake supervision and risk management. It is being organized by the China Banking Regulatory Commission, with the involvement of the National Development and Reform Commission, the Ministry of Industry and Information Technology, the Ministry of Finance, the People's Bank of China, the State Administration for Industry and Commerce, and the Legislative Affairs Office of the State Council.

The circular also says that the government has ordered local governments to take into account local conditions and take steps to ease the financing problems for small and medium enterprises.

Many borrowers in China use the services of fee-charging guarantors and the meeting will draw up regulations that cover how loan guarantors are established, how much they can lend and how they will be supervised. The regulations are to be submitted to the State Council for approval.

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