Virtually all Chinese banks already set aside more money than the required minimum to compensate for bad loans. Photo: Reuters
Virtually all Chinese banks already set aside more money than the required minimum to compensate for bad loans. Photo: Reuters

China intends to boost bank dividends with proposed cap on bad loan provisions, but will this backfire?

  • China’s Finance Ministry has proposed a new rule that would cap the amount banks have to set aside for bad loans
  • Loan loss provisions should not exceed twice of the minimum regulatory level with any excess funds released as profits

Virtually all Chinese banks already set aside more money than the required minimum to compensate for bad loans. Photo: Reuters
Virtually all Chinese banks already set aside more money than the required minimum to compensate for bad loans. Photo: Reuters
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