China's banking regulators have imposed a fine of 52.5 million yuan (about 8.33 million U.S. dollars) on 19 banking institutions over a pledge loan fraud case in the country's central Shaanxi and Henan provinces.
These lenders, including local branches of the Industrial and Commercial Bank of China, were punished for granting loans of up to 19 billion yuan (3.01 billion U.S. dollars) to criminals who illegally used low-purity gold as pledges, the China Banking Regulatory Commission (CBRC) said.
The loan fraud case has exposed "numerous defects" in the internal controls and management of these institutions, which sought business expansion aggressively and blindly, "creating loopholes that criminals can exploit," the regulator said in a statement.
A total of 104 employees in the banking industry were also punished, while 35 criminals involved in the case have been arrested, according to the CBRC.
China has been intensifying regulatory scrutiny on lending activities to rein in financial risks. Only a week ago, 12 banks were fined a total of 295 million yuan (46.81 million U.S. dollars) over a bill fraud case in the northwestern province of Gansu.