The People's Bank of China, China's central bank, Wednesday warned that companies purposely dodging debt owed to banks will face allied sanctions from the whole financial sector.
An official from the central bank blames debt evasion as a major reason for the high ratio of bad loans in commercial banks, saying the central bank will spare no efforts to solve the extruding problem to standardize social credit order.
According to the official, the central bank will speed up promulgating regulations and laws to prevent financial risks and strengthen cooperation with judiciary departments.
He also called for banking associations and self-discipline institutes to play their due role to protect the creditors' rights.
The official noted that since 1998, the state has worked out a series of policies in this respect, which have helped effectively curb the expanding trend of debt default. He admitted that impelled by interest, such practice is still pervasive in the country.
A survey by the central bank shows that by the end of last year, 51.29 percent of 62,000 companies experiencing restructuring which opened accounts with the five commercial banks have been found to have committed debt evasion actions. The volume of debt defaulting totaled 185 billion yuan, accounting for 31.6 percent of the total debts of these companies.
The survey also noted that nearly 70 percent of these companies are State-owned.
(China Daily 06/06/2001)