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More than 1,200 financial institutions were hit with penalties last year as China's banking regulator stepped up its supervisory role.
The China Banking Regulatory Commission (CBRC) said Wednesday it discovered irregularities at 1,242 institutions under its supervision in 2003. The 3,251 people responsible for the irregularities were penalized.
Illegal behavior was also found at 242 entities owned by the nation's four State-owned commercial banks - the Industrial and Commercial Bank of China, the Bank of China, the China Construction Bank and the Agricultural Bank of China.
It is claimed that 1,928 people took part in illegal behavior. Sixteen cases are being investigated by judicial departments, 36 people have been fired and another 40 have been removed from their original posts.
After its establishment in April, the banking watchdog launched inspections into loans, non-credit and off-the-balance-sheet assets of the nation's commercial banks. It later held a broader probe into commercial banks' lending practices after rapid loan raises prompted worries about new non-performing loans (NPLs).
Many cases of fraud or other types of irregularities involving commercial bills were uncovered.
Many commercial banks were too lenient when supervising their commercial bill businesses and had weaknesses in preventing related financial risks, according to commission findings.
Bank loans by way of commercial bills witnessed expansive growth last year as commercial banks competed fiercely for the business they saw as being safer than regular loans, partly as an effort to dilute their NPL ratios by boosting total lending.
The loans slowed significantly after cases of fraud were found and the investigations began.
The commercial banks were quick to correct their conduct and prevent further losses, the commission said.
The Agricultural Bank of China, for example, recovered all the 119 billion yuan (US$14.3 billion) involved in a fund misuse case at one of its branches in Northeast China's Heilongjian Province thanks to "forceful measures," the CBRC said.
(China Daily February 12, 2004)
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