China Banking Sector has emerged from the under shackles of communism like a phoenix vowing a complete reversal from the trend of 'policy lending'.
So long China's banking model has been starkly different from that observed in most parts of the world. Instead of calculating investment and expenditure incurred by savings at the market-governed interest rates, China Banking Sector has been gathering savings from individuals and channelising them to Party priorities. Presently, non-performing loans (NPLs) constitutes more than 20 % of the outstanding loans for the overall banking sector, a fallout of the planned economic model.
However, a fresh gust of change is perceptible in the Banking Sector market in china. Banking Regulatory Commission of china affirms that the share of NPLs for domestic banks was marked at 19.7 % in June 2005, a decrease of 3.52 % points at the beginning of the year.
RNCOS' recent market research report, "China Banking Sector Analysis (2006-2009)", talks about the reforming face of banking sector vis-a-vis the opportunities and challenges in future.
Analysts assert that - "the NPL (non-performing loan) rate of major commercial banks in China fell from 17.9 % at the end of 2003 to 8.9 % at the end of 2005. At the end of 2005, the NPL rate for city commercial banks had fallen nearly 4 % to 7.73 %".
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