July 16, 2006	Sunday	Jumadi-ul-Sani 19, 1427

BEIJING, July 15: A top parliamentary committee has called for tighter controls on bank loans to ease excess lending and overheating pressure on the economy, the Xinhua news agency said on Saturday.

The National People's Congress economic and finance committee, which met on Thursday and Friday, warned that the economy still faces contradictions and problems ranging from over-rapid investment and too many new projects to excess liquidity linked to overlending.

Committee members said stronger policies were needed to improve the effectiveness of macro-economic controls and various policy tools for reduction of liquidity in the banking system, Xinhua said.

More guidance should be made on loans for the rational granting of loans by different commercial banks, Xinhua said, summarising the meeting.

All those regulations on package loans should be cleared and rectified and all those loans granted in violation to the state laws and regulations should be checked to keep excess loans under control. More loans should be granted to boost agriculture and to medium and small enterprises, it said.

Other contradictions included the lack of balance between imports and exports and the significant rise in foreign exchange reserves, the price of housing in some large and medium sized cities continued to climb sharply and the goals of saving energy, reducing energy consumption and alleviating pollution were difficult, Xinhua said.

The report followed a warning on Friday by China's top banking regulator that the country's lenders should keep credit growth in check and guard against risks from lending to sectors that face overcapacity or are undergoing consolidation.

Liu Mingkang, head of the China Banking Regulatory Commission, said banks needed to improve internal controls given increasing market risks.

Many policy makers in recent months have urged banks to increase lending to small and medium-sized enterprises, to which banks have traditionally been reluctant to extend credit.— Reuters