* PBOC urges banks to issue property loans, mortgages
* New rules have emerged when policymakers shift focus back to debt risks
* China’s growth has almost returned to pre-COVID levels
* Aims to help banks cope with property market volatility (Adding details, background)
BEIJING, Dec. 31 (Reuters) – China’s central bank issued a ruling Thursday to ban property lending by banks, while authorities shift their attention back to debt risks and look to protection from crossing the building area.
The People’s Bank of China (PBOC) said each bank’s property loans as a proportion of total loans, as well as the ratio of outstanding mortgages to total loans, should be capped as necessary.
Establishing the so-called collection management system for property loans will increase the ability of lenders to withstand fluctuations in the real estate market and prevent systemic financial risks caused by over-reliance on property loans. in the financial system, the PBOC said.
With China’s economy almost recovering from pre-coronavirus levels, policymakers have been turning their attention back to financial risks after taking out bank loans this year. But analysts believe China’s overall credit growth will only be modest in the short term as there are still warnings about the global economic outlook.
The government had for years taken steps to limit credit to the real estate sector to cover financial risks. Nearly 30% of outstanding loans by Chinese financial institutions were property loans by the end of September, according to PBOC data.
For the four major banks in China, along with the Development Bank of China, the Communications Bank and the Post Savings Bank of China, the ratio of outstanding property loans to total loans will be limited by 40% and the outstanding mortgages As a proportion of total loans. capped at 32.5%.
For smaller banks, there are different requirements. The PBOC said the requirements could fluctuate above or below 2.5 percentage points depending on the economic performance of the area.
Banks that do not meet the requirements would give grace time. If they missed the requirements by less than 2 percentage points, they would get a grace period of two years. If it was more than 2 percentage points, the grace period would be four years.
The new rules will take effect from January 1. (Reporting by Stella Qiu, Zoey Zhang, Cheng Leng and Ryan Woo; Editing by Clarence Fernandez, Robert Birsel)