The China Banking Regulatory Commission disciplines seven commercial banks in Shanghai for “certain misconduct,” reported the Shanghai Municipal People’s Government.
CBRC reached such decision to curb the irregularities it discovered relating to the processing of mortgage loans.
For violating lending policies, CBRC suspended the home loan services of Bank of China, the Bank of Communications, China Construction Bank, HSBC Shanghai, Industrial Bank, Industrial and Commercial Bank of China and Shanghai Pudong Development Bank for two months.
The banking regulator likewise ordered commercial banks in Shanghai to temporarily quit doing business with Hanyu Property Consultancy, Homelink Real Estate Agency and Pacific Rehouse Service--among the six real estate firms getting punished--for one month.
According to local site The Paper, an official from Homelink said that the company will handle the matter by exploring other available measures, to which he did not anymore go into detail, reported The National, a news portal from the Middle East.
The suspension started on Monday, April 25.
The commission’s Shanghai office and the People’s Bank of China’s Shanghai branch jointly issued a notice in March declaring their intention to improve the overall mortgage operations in the city, according to the local government of Shanghai.
Pan Gongshen, the deputy governor of PBOC, said that the government perseveres to control the increasing property prices in Shanghai and other first-tier cities. Pan added that banks should examine carefully all mortgage applications they receive.
Home prices in Shanghai climbed 21 percent in February, according to Bloomberg.
Zhou Xiaochuan, the governor of China’s central bank, told banks in March that they should exercise caution when evaluating creditworthiness of mortgage applicants.
Zhou also warned banks that bad debts become likely to occur when real estate brokers get involved with unauthorized loans.