China: Officials take steps to curb off-balance sheet lending by banks - ICICI Bank : Treasury Research

The recent spike in interbank interest rates in China is widely seen in the light of authorities' efforts to curb excessive off-balance sheet lending by the banking sector.

Off-balance sheet lending is mainly financed through issuance of wealth management products (WMPs) that have gained in popularity and now reportedly account for 40% of total non-bank-loan financing.

Given the growth slowdown, concerns have exacerbated over the asset quality of the banking sector thereby leading the authorities to take aggressive measures to rein in shadow banking.

In process, authorities seem to be willing to tolerate a slightly lower growth in order to improve banking sector's health.

Source : Equity Bulls

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