BEIJING: China's banking regulator has issued two regulations that aim to tighten banks' lending and
risk management controls.

Banks must set a lending quota after "prudent calculation" of borrowers' "actual demand" and must
not lend excessively, the China Banking Regulatory Commission (CBRC) said in a statement on its
website on Saturday.

Banks are also required to improve risk control after granting loans and to be aware of factors that
might influence the repaying capabilities of borrowers through inspections and monitoring, the
statement said.

For personal lending, the CBRC asked banks to be more sophisticated in the management of the
lending process, especially on the use of the loans, according to the regulation.

Borrowers will not be able to obtain loans without declaration of a specific use, and they should meet
bank representatives in person to avoid false claims, according to the CBRC.

The regulations took effect on Feb 12 and aim to achieve systematic management of credit risk and
avoidance of loan appropriation, the statement said.

China's banking regulator asked lenders to keep 2010 credit growth at a reasonable pace last month
and vowed to tighten supervision of property loans amid increased concern about an asset bubble.

Liu Mingkang, the CBRC chairman, said on Jan 27 the Chinese government is aiming to restrict credit
supply to 7.5 trillion yuan ($1.1 trillion) in 2010.

China has raised the deposit reserve requirement ratio twice this year, after holding it steady for over
a year, to handle the "comparatively loose liquidity" while keeping the "moderately easy" monetary
policy unchanged, according to the central bank.

China's yuan-denominated lending in 2009 hit a record 9.59 trillion yuan, almost double that of the
previous year. New yuan-denominated lending in January stood at 1.39 trillion yuan, down 14.2
percent from a year earlier, according to the People's BankL of China, the central bank.