China bank regulator: $467 bln of bank loans flow to grey market -paper

Aug 10 (Reuters) - About 3 trillion yuan ($466.5 billion) worth of bank loans have flowed into the grey market for high-yielding loans in the eastern coastal provinces of Jiangsu and Zhejiang, where small- and medium-enterprises are desperate for funding, the Securities Times reported on Wednesday, citing a speech by top banking regulator Liu Mingkang.

The China Banking Regulatory Commission (CBRC) has already started a nationwide crackdown on such practices, and urged banks to monitor loan flows more closely, Liu told an internal conference recently, according to the newspaper.

Some borrowers, including state-owned guarantor and finance companies, have channelled bank lending into the grey funding market seeking higher interest spreads, literally acting as loan sharks, the article said, citing Liu.

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