Chinese auditors found the country's five commercial banks, including the Industrial and Commercial Bank of China (ICBC), misallocated 58 billion yuan (8.9 billion U.S. dollars) of policy loans, chief auditor Liu Jiayi said Monday.

Liu, head of the National Audit Office, made the statement in a report submitted to the 21th session of the Standing Committee of the 11th National People's Congress (NPC), the top legislature.

Liu said that various policy-based financial institutions have been following the country's policies to make their own loan plans and boost operation and risk-prevention abilities but problems still exist in loans and insurance services.

These financial institutions cited include China Life Insurance Company, Property and Casualty Company Limited (PICC) and the five commercial banks, China Construction Bank, Bank of China, Agricultural Bank of China, the Bank of Communications and the ICBC.

Among the policy loans misused, 25.4 billion yuan was granted to projects that lacked sufficient capital funds or bypassed approval procedures.

Auditing of China Life and PICC's 499 branches revealed that some of these branches used false insurance claims and payments to steal insurance funds that totaled 1.99 billion yuan.

According to Liu, related financial institutions have rectified 18.5 billion yuan involved in illegal management, and another 84.79 million yuan was recovered or collected as taxes.

In addition, Liu said that high application requirements, complicated procedures and short loan terms have been preventing many individuals and companies from applying for small loans.

Figures revealed by Liu, based on spot checks in nine provinces and municipalities, show that although policies allowed a total of 16 billion yuan for small loans, only 3.79 billion came last year.