Managing Commercial Property Loans Effectively to Meet the Reasonable Financing Needs of Real Estate Enterprises
On January 24, 2024, the General Administration Department of the People's Bank of China (PBOC) and the General Office of the National Financial Regulatory Administration (NFRA) jointly issued the Notice on Effectively Managing Commercial Property Loans (hereinafter referred to as the Notice) in order to implement the decisions of the Communist Party of China Central Committee and the State Council on promoting the stable and sound development of the real estate market, make full use of commercial property loans, and meet the reasonable financing needs of real estate enterprises.
The Notice sets down detailed requirements on the issuance of commercial property loans by commercial banks in terms of the regulatory scope as well as loan tenures, amounts and uses. To the property developers that feature compliant operation and have good prospects, national commercial banks are allowed, till the end of 2024, to issue commercial property loans which will be used to repay the loans or publicly issued bonds related to the existing real estate projects of such developers and their holding companies, including their consolidated subsidiaries, on the premise that the risks are controllable and in line with the principle of commercial sustainability. Such uses of commercial property loans are allowed in addition to the uses of meeting the property's own operating needs and replacing the loans or shareholder lendings made for the construction or purchase of the property.
Going forward, the PBOC and the NFRA will guide commercial banks to quickly move ahead with the implementation of the Notice, to conduct the commercial property loan business in compliance with laws and regulations, and to meet the reasonable financing needs of real estate enterprises regardless of their ownership types, thereby promoting the stable and sound development of the real estate market.