Tighter rules for trusts and bills
Dual initiatives are being lined up with the aim of removing opaque financing practices in mainland investment trust and corporate paper markets
Beijing is readying twin initiatives to curb opaque financing practices that threaten the stability of the country's US$864 billion investment trust industry and booming corporate paper market, sources say.
The moves, from the People's Bank of China (PBOC) and the China Banking Regulatory Commission (CBRC), form part of a campaign to clean up the country's financial system as it opens up domestic capital markets to diversify funding options for cash-strapped firms.
Two sources close to the CBRC said the big four managers of bad loans - so-called asset management companies (AMCs) - would be banned from lending directly to investment trust companies under the pretext of acquiring bad debt.
Meanwhile, continuing a clampdown on the corporate bill that began last year, the PBOC would, from next year, stop bankers acceptances and similar products from being used to camouflage off-balance-sheet lending to firms, sources said.
Neither the CBRC nor the PBOC provided comment on their plans.
The initiatives could provide reassurance that Beijing is serious about rooting out hidden risks that investors fear lurk in a financial system dominated by state-controlled banks and government-backed business.