On a workshop recently held by China Banking Regulatory Commission, China's banking watchdog required that state-owned commercial banks adopt the following eight measures to address the new issues in the financial sector emerged in the macro-control which has made positive results.

--- Understand and implement the macro-control policy fully and accuately on the basis of the right understanding of the present economic and financial situation. Explore innovative ideas and mechanisms for risk management and have them carried out top-to-bottom.

--- Take the macro-control as an opportunity to speed up the establishment of a long-tem risk management regime. Corporate governance should be further reformed and optimized to improve the rationality and transparency of decision making. A prudent capital monitoring system should be strictly observed with a strong awareness of capital restrained assets. A perfect credit extension system should be there to watch and warn risks in loans risk concentration and credit grants to related businesses. Loans should be classified into five classes fully in compliance with the benchmarks in the rating system and loss provisions should be put aside. More efforts should be made on non-performing loans management and disposal.

--- Take the real situation into account when accepting or refusing loans applications. Banks should have rational loans risk control systems which set up solid fire walls against risks on one hand and facilitate communication between borrowers and lenders on the other. With a strict observation of loans policy, banks should offer reasonable lending services to eligible business and projects which foreshadow promising market prospect, economic returns, and more job opportunities.

--- Carry out the State Council's decision on investment system reform. With the effective back-up of information technology, improve the system, procedures and decision making process for fixed assets loans, especially projects financing. Banks should review and made decisions on loans extension on their own account. Therefore, it is particularly important to guard against financial risks.

--- Responsibilities should be defined for loans risk management as soon as possible for various business. Banks are asked to work out detailed feasible guidelines in line with CBRC's instructions on commercial banks credit business for duties and performance assessment to specify responsibilities of personnel involved in credit extension services.

--- Intermediary business should be developed faster to reduce banks' reliance on interest spread. Technical back-up for intermediary services and hi-end clients should be upgraded to provide better services.

--- Reduce bad assets on one hand and prevent new NPLs on the other. The balance and ratio of NPLs should continue to be put under watch and subject to check-up to make sure the five-class rating reflects the real risk exposure of loans. Establish and improve management information system to control risks in concentrated loans and related transactions. Personnel should shoulder responsibilities due for the write-off of NPLs. The disposal of NPLs will be beefed up with new channels.

--- Push the sweeping reform of state-onwed commercial banks forward. Bank of China and Construction Bank of China should progress ahead in line with CBRC's document on their reform of corporate governance and supervision. Industrial and Commercial Bank of China and Bank of Agriculture are also expected to speed up their internal overhaul to lay a good foundation for their further reform.

The meeting appreciated some new measures which have been adopted by state-owned commercial banks in the macro-control. For example, theses banks have established regimes which restrain irrational expansion with capital benchmark. Interest rate is employed to leverage the loans. With the principle of costs-revenue and based on Basel, returns on loans are estimated as criteria of projects assessment. Industrial analysis centers are in place to develop warning systems for risk exposure and channel loans according to analysis of various sectors.

By People's Daily Online