The Shanghai Banking Association has published guidelines on syndicated lending, in an effort to kick-start the mainland's fledgling syndicated loan market.
Member banks were told to move corporate loans exceeding one billion yuan to the syndication market to diversify risks and promote syndication as a standard lending format in the country.
China's syndicated loan market is expected to grow to US$7 billion this year, as more Chinese corporates look to expand overseas.
That leaves the mainland a junior player in the regional syndication market, with just 18 per cent of Asia's total syndicated loans made last year, compared with Japan's 50 per cent, according to the Asia Pacific Loan Market Association.
The guidelines, contained in a co-operative agreement for arranging syndicated loans issued last week, are now being tried out by members of the association, a non-government organisation that seeks to promote the sector's self-discipline and interests of participating banks.
Association members include local banks such as Agricultural Bank of China, Industrial & Commercial Bank of China and leading multinational investment banks such as JP Morgan Chase and Deutsche Bank. Foreign banks were allowed to start granting corporate loans in 2003.
The agreement said that commercial banks should regard syndication 'as a principle' on each corporate financing application exceeding one billion yuan and if maturity is 'mid-to-long term'.