China’s highest reviewing authority is set to examine the country’s $3 trillion trust industry in the wake of growing losses incurred due to property loans, Bloomberg has reported.

The unexpected audit may lead to revamping of trust industry, which is a major part of China’s shadow banking sector.

The shadow banking activities help people to make risky investments by escaping capital or investment laws of the country.

As part of the latest move, China’s National Audit Office has been reviewing the records of around 20 trust companies, which involve top five firms, for the last few months.

The review was conducted to measure the potential threats posed by the trust companies towards the financial stability of the country, stated the news agency citing sources familiar with the development.

National Audit Office has also directed the companies to document their risky loans to developers and provide information on their strategies to dispose of them.

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Chinese policymakers could take a final call on the overhauling of the sector on the basis of the final report to be submitted by the auditor, the report said.

Although the probable course of action to be taken by the regulators are not clear, the review has showed the efforts of the administration to check the property business from disrupting the overall financial industry.

Industry data tracker Use Trust estimates that nearly $8.6bn (¥58bn) of investments related to property developers, which were bought by wealthy Chinese, have defaulted so far this year.

Such investors have faced the problem of liquidity crunch that has led dozens of developers to default their loans and stall development of numerous projects throughout China. Homebuyers and bond fund management entities have also faced the problem.

Since 1979, China has reformed its trust industry for at least six times. The sector includes various types of commercial and investment banking as well as private equity and wealth management activities.

Companies working in this industry collect savings from individuals to provide loans. They also make investments in real estate, stocks, bonds, commodities, among others.