Local banks have been advised to stop selling short-term investment products by the China Banking Regulatory Commission.
This is aimed to curtail the fierce competition among banks ttrying to attract deposits under the disguise of short-term investment products with higher yields, said Liu Jianjun, director of retail business department of the China Merchants Bank.
Liu said the regulator's guideline would be helpful to protect the healthy development of the wealth management industry because many banks used to depend on such investment products to compete for deposits to meet the loan-to-deposit regulatory requirement.
Earlier this month, CBRC new chairman Shang Fulin ordered banks to strictly implement the loan-to-deposit requirement on a daily basis and prohibited them from wooing depositors under the veil of short-term investment products with higher yields.
About one-fourth of the Chinese clients surveyed said they had been misled into buying investment products from banks, while more than 16 percent of respondents said banks exaggerating their yields without adequately disclosing the risks, according to a report by the Nasdaq-listed website Bankrate.com on Thursday.
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