The China Banking Regulatory Commission ("CBRC") has recently distributed the Circular on Further Deepening the Rectification of Market Chaos in the Banking Sector as well as the Opinions on Further Deepening the Rectification of Market Chaos in the Banking Sector (the "Opinions") and the Key Tasks for Rectifying the Market Chaos in the Banking Sector in 2018 (the "Key Tasks").
The Opinions specify in ten articles priorities of the rectification program, stressing tough investigations into the practices of having interbank activities, wealth-management products, off-balance sheet, etc. nested with each other through multiple layers, the mismatch between the pace of business development and the capability of internal control and risk management, violations in increasing leverage, extending the interbank chain and seeking regulatory arbitrage, unregulated establishment of institutions and provision of services, illegal sales activities and benefit transfer, etc. In addition, the Key Tasks, comprised of 22 articles, expound on the focus of work in 2018 in eight respects, expressly stating that the overhauling program will target the incomplete corporate governance, violations of macroeconomic regulation and control policies, shadow banking, risks of interconnected financial products, infringement upon financial consumers' rights and benefits, transfer of benefits, illegal lending practices, risks of cases and operations, risks of industry probity, and also presenting a separate negative list for the fulfillment of regulatory duties.