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China's banking regulator inspects large client loans: sources

[SHANGHAI] Regional offices of China's banking regulator have begun inspections of banks' loans to large clients, two sources with knowledge of the development told Reuters on Tuesday.

The move comes amid a wide-ranging crackdown on risk in China's financial sector that has netted top regulatory officials for corruption and curbed abuses in shadow banking.

Local banking regulatory bureaus have been asked to select a company at random, check the value of loans taken by it at the end of 2017, all new credit last year, the number of lending entities and the level of soured debt, the two sources said.

"Banks have already reported their data, banks have over-lent, the problem of form over substance in inspections is still pretty serious," said one of the sources.

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The minimum size or other measure that the bureaus are using to target large loans to clients is not known.

The China Banking and Insurance Regulatory Commission (CBIRC) did not respond to requests for comment.

On March 2, the China Banking Regulatory Commission - since then expanded to encompass insurance - said the danger that non-performing loans will rise persists.