China’s banking regulator is moving to address rising financial risks stemming from the country’s slumping property market and several small banks ensnared in a liquidity crisis.
The China Banking and Insurance Regulatory Commission said in a statement published on its website Monday that it will urge banks to provide the credit that eligible property developers need to complete unfinished residential projects. It will also study a plan to fill future funding gaps for such projects.
The commission said it will work with local governments and other regulators to guarantee the delivery of houses after homeowners from several provinces said they would suspend mortgage payments on delayed homes. Home deliveries have been delayed recently amid widening funding gaps faced by many property developers in China.
In the same statement, the regulator said it has been working with other government bodies to resolve the risks associated with five small rural banks in China’s Henan and Anhui provinces. Customers at the banks have been cut off from accessing their savings since April. The commission said that savers with deposits of more than 50,000 yuan ($ 7,400) will start to receive payments later, after depositors with savings less than CNY50,000 received payment last week.
Following a three-month probe, the Henan New Wealth Group was found to have manipulated the five banks and used third-party platforms and fund brokers to collect public savings, the commission said. It also denied that the refunds given last week were due to a protest mounted by depositors.