The China Banking Regulatory Commission (CBRC) has established a new unit to oversee trust companies in an effort to mitigate financial risk in shadow banking sector.
Trust companies are non-bank lenders that raise funds by selling wealth management products (WMPs) and use the proceeds from the sale to fund loans to borrowers such as property developers, local governments and others.
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As part of the new structure, CBRC is also planning to establish new departments to supervise city commercial banks and credit cooperatives, reported Reuters.
The move is part of the regulator’s plan to strengthen on-site inspection and supervision and further boost risk supervision.
Last month, China established an insurance fund for its $2.1trn for trust sector to mitigate financial risk in shadow banking sector.
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