Bad loan ratio of 2% is reasonable

A bad loan comparative measure during 2 percent for Chinese banks is tolerable after factoring in internal government debt as well as tightening measures in the genuine estate sector, the countrys tip promissory note regulator pronounced yesterday.

As the building country, the 2 percent non-performing loan comparative measure is considered picturesque as well as reasonable, Liu Mingkang, chairman of the China Banking Regulatory Commission, was quoted as saying by Caixin Online.

But Liu cautioned that internal government-backed financing vehicles pose the biggest risk to the countrys promissory note system.

The bad loan comparative measure of Chinese banks stood during 1.2 percent during the end of September.

Liu brushed off concerns about risks from genuine estate development loans or particular mortgages, observant that the risks in the zone are still under control. The concern in the genuine estate zone is upon land reserve loans, that refer to the internal governments financing arm again, he pointed out.

The many worrying issue during this point is loans to land reserve centers, pronounced Liu, referring to land departments set up by internal governments, that mostly acquire short-term loans from banks to financial land purchases as well as new developments.

The countrys big five banks pronounced they have already tightened loans to developers.

Previously, developers could enjoy the benchmark or even discount rate, pronounced the credit officer during one of the banks, who did not wish to be named. However, big-name developers have to face the premium upon loan rates whilst small developers are close off from getting loans.-Shanghai Daily