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Beijing, July 26 (PTI) Chinese banks are facing default risks on loans worth about USD 228 billion, which were given to local governments there, a media report said. Quoting senior Chinese officials, the Financial Times today reported that banks are facing serious default risks on more than 1,550 billion renminbi (USD 228 billion) in loans. "In a preliminary self-assessment carried out at the request of China''s banking regulator, the country''s commercial banks have identified about one-fifth of 7,700 billion renminbi lent to local government financing vehicles, which are mostly used to fund regional infrastructure projects," the report said. Attributing the report to a senior official from the China Banking Regulatory Commission, the UK daily noted that all these loans might not necessarily go bad, but the non-performing loan ratio would almost certainly increase slightly by the end of the year. The Financial Times said that Chinese banks lent "9,600 billion renminbi last year -- more than double the new loans issued in 2008 -- on orders from Beijing to prop up the economy in the face of the financial crisis".
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