China’s central bank said risks with commercial bills of exchange, short-term financing instruments, are increasing in the world’s fastest-growing major economy.
The amount of overdue payments in commercial bill financing at the nation’s banks and financial institutions increased to 10.5 billion yuan ($1.5 billion) at the end of June, a gain of 10.1 percent from the end of the first quarter, the People’s Bank of China said today in a statement on its website.
China’s regulators have expressed concern about hidden risks in the banking system after the government unleashed a record $1.4 trillion of lending last year to combat the effects of the global financial crisis. The China Banking Regulatory Commission ordered banks last week to transfer off-balance-sheet loans onto their books and make provisions for those that may default.
The central bank said non-payment of commercial bills was concentrated in the rural credit cooperatives and financial institutions. In the second quarter, the amount of overdue payments in these organizations rose 128 percent, the central bank said.
The ratio of overdue payments among rural institutions was higher than the 10.1 percent national average, it said, without giving details.
Commercial bills of exchange are financing bills with time periods of no longer than six months, which pay a designated amount of money to the holder on a specified date.
Short-term financing transactions in the second quarter using commercial bills of exchange reached 2.51 trillion yuan, an increase of 17 percent from the same period in the previous year, the central bank said.
