China allows banks to sell loans to each other

China has started allowing banks to sell loans to each other, an important step towards giving market forces bigger sway in the country''s financial system, the central bank said on Saturday. Interbank loan transfers will help lenders keep a handle on risks and will also promote the liberalisation of interest rates, which are tightly controlled by the government at present, central bank governor Zhou Xiaochuan said.
At its launch on Saturday, 21 banks joined the transfer system, the People''s Bank of China said in a statement on its website (www.pbc.gov.cn). The first loan transfer deals were also announced, including one between Industrial and Commercial Bank of China and Bank of Communications, two of the country''s largest lenders.