News Column

China : PRIVATE banks to expand

June 24, 2014

Ma Delun, former deputy governor of the People's Bank of China, the central bank, said at a forum on 21 June 2014, development of smaller banks including the privately owned banks will break the "too-big-to-fail" moral hazard of dominant large state-owned banks.

Ma said, the increasing demand of small enterprises for financial services will bring prospects for the development of the privately owned banks.

Challenges for privately held banks include high operation and financial costs, as well as demand for risk control as their target clients are those with larger default risks.

China launched a pilot program in March 2014 to open the state-dominated banking sector to private investors.

The banking regulator approved 10 companies including e-commerce giant Tencent and Alibaba to take part in the set up of five pilot private banks.

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Source: TendersInfo (India)

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