Penalty for operating loans flowing into real estate?

Punishment methods for individuals when loan funds flow into the housing market include: First, collecting loans in advance and requiring all loans to be paid off. Second, the interest is doubled. Relevant laws of our country stipulate that credit funds are misappropriated and flow to the real estate field: First, personal comprehensive consumption loans, operating loans, "down payment loans", credit card overdrafts and other funds are misappropriated to purchase houses, and other bank credit funds are illegally misappropriated and used in the real estate field. Second, funds illegally flowed into the real estate market through shadow banking channels. Third, loans such as merger and acquisition loans and operating property loans were not managed prudently, and funds were misappropriated for real estate development. The fourth is to provide financing for real estate development projects through working capital credit, operating property credit, etc.

Legal Basis

Article 4 of the "Notice of the General Office of the China Banking and Insurance Regulatory Commission on Carrying out Special Inspections on the Real Estate Business of Banking Institutions in 2019" stipulates that credit funds are misappropriated and flowed to the real estate sector: First, individuals Comprehensive consumer loans, operating loans, "down payment loans", credit card overdrafts and other funds were misappropriated to purchase houses, and other bank credit funds were illegally misappropriated in the real estate field. Second, funds illegally flowed into the real estate market through shadow banking channels. Third, loans such as merger and acquisition loans and operating property loans were not managed prudently, and funds were misappropriated for real estate development. The fourth is to provide financing for real estate development projects through working capital credit, operating property credit, etc. Many banks have warned: Business loans must not flow into the property market in violation of regulations

Supervision to prevent business loans from flowing into the real estate sector in violation of regulations continues. After the China Banking and Insurance Regulatory Commission and other departments issued the "Notice on Preventing the Illegal Flow of Business Loans into the Real Estate Sector" in March this year, the Agricultural Bank of China (601288, Stock Bar) recently issued the "Announcement on the Limitation of the Use of Our Bank's Business Loan Funds" stating, " Loan funds for business purposes handled by our bank should be used in accordance with national laws and regulations and the purposes agreed in the loan contract, and must not flow into the real estate sector in violation of regulations. "The reporter found that previously, Maguan Rural Commercial Bank, China Postal Savings Bank, and Lianshan. Rural Commercial Bank and many other banks have issued similar announcements, all of which involve restricting the illegal inflow of business and consumer loan funds into real estate and other fields.

Many banks have issued announcements strictly prohibiting business loans from flowing into the property market

According to the announcement issued by the Agricultural Bank of China on May 14, the business loan funds handled by users with the bank should be in accordance with national laws. The purposes specified in the regulations and the loan contract shall not be used in the real estate field in violation of regulations, including but not limited to: not being used for real estate development or operation, purchasing residential or commercial buildings, etc., and not using loan funds for other fields and purposes prohibited by the state. . If the above requirements are violated, the bank has the right to immediately withdraw the loan that has been issued, reduce or cancel the undrawn loan limit under the loan contract, and has the right to exercise various breach of contract remedies in accordance with the loan contract.

On the same day, Shimonoseki Rural Commercial Bank also issued the "Announcement on the Limitation of the Use of Loan Funds for Our Bank's Business Purposes", which mentioned that business loans must not flow into the real estate sector in violation of regulations. If users violate the requirements, the bank can immediately withdraw them Loans have been disbursed and other provisions.

Earlier, on April 15, the Postal Savings Bank issued the "Announcement on the Limitation of the Use of Personal Business Loans of Our Bank", stating that personal business loans should be used according to the purposes agreed in the loan contract. It can only be used for legal production and business activities, and may not be used to purchase real estate, securities, commercial insurance, funds, financial products, futures, equity, real estate development projects, etc., or be used in other prohibited fields or engage in illegal business activities. If the relevant contract is violated, the bank has the right to immediately withdraw the loan and freeze the credit limit, and the borrower shall bear corresponding legal liabilities.

In the reporter’s previous investigation, some people in the banking industry in Beijing also revealed that some commercial banks within the jurisdiction of Beijing have been following the "Notification Letter of Early Expiration of Personal Loans" to conduct illegal flow of credit funds to the property market. Recycling requires customers to return it in advance.

In this regard, Wang Hongying, president of the China (Hong Kong) Financial Derivatives Investment Research Institute, said that the reason why commercial banks prohibit operating loans from flowing into the property market is mainly to prevent them from being used to support the recovery of the real industry after the epidemic. Low-interest loans are used for real estate speculation or stock market investment. Since the Agricultural Bank of China and the Postal Savings Bank of China mainly support credit for the rural economy, the recent announcements issued by the two major banks actually serve as role models for governance and rectification.

In Wang Hongying’s view, city commercial banks, rural commercial banks, rural financial institutions, etc. that target local farmers and small and micro enterprises will also carry out relevant work. According to statistics from reporters, recently, Lianshan Rural Commercial Bank, Shantou Gulf Rural Commercial Bank, Xinxing Rural Commercial Bank, Yijinhuoluojingu Rural Bank, Tianjin Binhai Jianghuai Rural Bank, Chizhou Jiuhua Rural Commercial Bank, Taihu Rural Commercial Bank, etc. Many banks have issued similar announcements, all of which involve restricting the illegal diversion of personal business or consumer loans into real estate and other fields.

Tightening supervision to prevent business loans from flowing into the property market

The announcements issued by various banks are obviously related to the regulatory agencies’ increased efforts to investigate illegal personal business loans flowing into the property market.

In March this year, the General Office of the China Banking and Insurance Regulatory Commission, the General Office of the Ministry of Housing and Urban-Rural Development, and the General Office of the People's Bank of China jointly issued the "Notice on Preventing the Illegal Flow of Business-use Loans into the Real Estate Sector" to clarify the banking financial Institutions must strengthen the "three inspections" (i.e. pre-loan investigation, loan review and post-loan inspection) for business loans to prevent business loans from illegally flowing into the real estate sector and better support the development of the real economy.

Regulatory agencies in many places have also issued notices to prevent business loans and consumer loans from illegally flowing into the property market. For example, in early April, the Housing Security and Real Estate Administration Bureau of Hefei City, Anhui Province issued the "Notice on Further Promoting the Stable and Healthy Development of the Real Estate Market in Our City", which requires strengthening the sources of down payment funds for personal housing loans, the minimum down payment ratio, debt service income ratio, loan Qualification review, and serious investigation and punishment of illegal flow of business-purpose loans into the real estate market. On May 8, the Office of the Coordination Group for the Sustainable and Healthy Development of the Real Estate Market in Shaoxing City, Zhejiang Province issued the "Notice on Further Promoting the Stable and Healthy Development of the Real Estate Market in Shaoxing City", clarifying the strict review of the sources of down payment funds for home purchases, and strict investigation and punishment of consumer loans and business loans. Waiting for credit funds to purchase a house in violation of regulations.

The reporter found that recent fines from regulatory agencies for illegal loans flowing into the real estate market have also appeared intensively. On May 14, Ningbo Yinzhou Rural Commercial Bank was also fined 2.15 million yuan due to illegal inflow of loan funds into the real estate market. Not long ago, the Shanghai Branch of Bank of Wenzhou and Qingdao Pingdu Huimin Rural Bank were also punished for illegally flowing personal consumption loans or business loans into the property market.

Wang Hongying suggested that in the future, regulatory agencies and banks can prevent funds from leaving the real industry and entering the real estate market through big data tracking and closed-loop operation of credit funds. At the same time, strict disciplinary measures must be introduced, such as promptly and unconditionally withdrawing loans that companies misappropriate credit funds for real estate, blacklisting them, and stopping credit support for the company for a period of time in the future. "Only in this way can we truly control the inflow of funds into the real estate market." Wang Hongying said. Where can personal business loans be used?

1. For normal capital needs in the borrower's legitimate business and investment activities, such as temporary and seasonal working capital turnover and purchase (maintenance) related to ongoing operations. Equipment, decoration business premises, etc. 2. Encourage the issuance of personal operating loans to manufacturing, wholesale, retail trade, logistics and transportation industries and other industries that are prioritized and supported by the country and whose main settlements are through our bank, with good business operations and clear main businesses. 3. Personal operating loans should be used to support the development of individual industrial and commercial enterprises and the private economy. However, bank loans will face certain risks for industries that are not in line with national industrial policies and are overdeveloped. 4. Loan funds are prohibited from being used for real estate development and land reserve. 5. Personal business loans shall not flow into the securities market, futures market, or be used for equity investment, real estate project development, etc. in any form. 6. It is prohibited to issue this loan to enterprises with potential safety hazards, poor product quality, poor market sales, "high energy consumption" and "high pollution".