Last week's deadly train crash has raised doubts that the heavily-indebted Ministry of Railways (MOR) will face higher lending rates; however, China's top four banks said on Friday that won't be the case, and that the railway credit risks are under control.

A high-speed train rammed into a stalled train near the city of Wenzhou in east Zhejiang Province on July 23, leaving 40 people dead and 191 injured.

The accident not only raised skepticism of the safety of China's fast-expanding railways, but also aroused concerns that banks will tighten lending to railway construction amid higher risk.

In response to that speculation, the Industrial and Commercial Bank of China (ICBC), the Construction Bank of China (CCB), Bank of China (BOA) and the Agriculture Bank of China (ABC) said they will continue to offer loans to the ministry based on market conditions and risk appraisal.

Credit offered by the four largest state-owned banks has been the major source funding the construction of China's fast-expanding railways in recent years.

MOR had total assets worth 3.41 trillion yuan (529.5 million U.S. dollars) by the end of the first quarter, but debt reached 1.98 trillion yuan, according to data released by the ministry.

According to Dagong Global Credit Rating Co., MOR borrowed 450 billion yuan last year, with total loans reaching 1.25 trillion yuan by the end of 2010.

Early this week, Liu Mingkang, chairman of China's top banking regulator, told banks to be alert to the risks of credit to railway and highway construction.

Sources close to the regulator told Xinhua that Liu's talks aim to highlight risk control, while that does not mean the end of lending to the railway industry.

Projects for upgrading railway safety technology will get more financial support, he said.

Despite the train crash, experts said the railway industry won't be significantly affected in getting loans from banks.

Zhao Qingming, a senior researcher with CCB, said MOR has solid and stable returns, and it will remain to be an appreciated customer for banks, and the tragic train crash will not change the industry's credit rating.

His view is echoed by Guo Tianyong, a professor with the China Central University of Finance, who said the accident will lift up MOR's risk rating but won't alter the big picture.

The MOR has little risk of defaulting on its debt, since its credit is endorsed by the Chinese government, he added.

An employee of a major state-owned bank told Xinhua that, before the central bank started tightening credit, banks have been competing to lend to MOR by offering loans at a 10-percent discount of interest rates compared with the benchmark rates.

Even at present, banks are willing to lend to MOR, against the backdrop of monetary tightening, at the benchmark rates, while others may find it difficult to get loans even on much higher rates, he said.

While the industry's credit conditions will largely remain intact, experts said locomotive makers and engineering companies will be affected more or less.

CCB sources told Xinhua that the bank will be more prudent in granting loans to newly-built projects.

Zhao Qingming predicted some high-speed railway projects will defer repaying loans, and that could heighten risks.

He noted that the accident will exert a bigger impact on securities brokers who bought hefty bonds issued by the MOR rather than banks, because the former are regularly more sensitive to market changes.

MOR spokesperson Wang Yongping said in May that the ministry's total investment this year will reach 745.5 billion yuan, with 600 billion yuan going toward infrastructure construction.

According to the country's 12th Five-Year Plan (2011-2015), railway investment during the period will hit 2.8 trillion yuan, as China's high-speed rail will expand to 45,000 km.