A senior official of the People's Bank of China, the central bank, urged banks throughout the country to slow the pace of granting loans and optimize their loan structure.

Wu Xiaoling, vice governor of the bank, made the remarks at a meeting on Tuesday, which was attended by officials from the State policy banks, State-run commercial banks, share-holding commercial banks, city commercial banks, as well as officials from branches of the People's Bank of China, the central bank.

She warned that fast growth in granting loans creates risks and asked the banks to slow down to a "reasonable level."

She also asked the bank officials to optimize loan structure in compliance with the State macro regulation and control policies, noting that loans in over invested sectors should be strictly controlled, while loans should be granted to those sectors that need expansion.

The banks should also step up control on capital in order to realize the goal of "steady performance", she said. The banks that have a capital adequacy ratio that is not up to the required level should control risk investment and enhance risk control and prevention ability.

The central bank meeting asked all bank departments to "accurately understand and carry out" the State macro control policies and improve services so as to promote the national economy to develop "steadily and healthily."

The central bank said on Wednesday that Chinese banks extended 209.4 billion yuan (US$26.1 billion) worth of local currency loans in May alone, nearly double that of the same month last year, showing an investment binge might be far from being curbed.

By the end of May this year, outstanding loans totaled 2.12 trillion yuan, surging 16 percent year on year and closing in on the central bank's annual target of 2.5 trillion yuan.

(Xinhua News Agency June 15, 2006)