New rules impacting the structuring and trading of loans

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clpstaff &clp articles

Recent regulations introduced by China banking regulators impact how commercial loans are structured and traded. Among other things, interest-only loans are now restricted and certain consent rights are mandated for loan transfers

China's banking regulators are in the news. Their next moves in hiking interest rates or increasing bank reserve ratios are subjects of lively debate in both the international and domestic media as market observers speculate on China's strategies to contain aggressive lending and cool inflation. China's banking regulators, in fact, are quite active and frequently issue new regulations which are not covered in the general press. For example, two new regulations promulgated by China Banking Regulatory Commission (CBRC) at the end of last year have not gotten much attention, but they do have important impacts on the way loans in China are both structured and traded. The regulations are:

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