China's top banking regulator has vowed to crack down on unreasonable charges and conditions attached to loans by the nation's banks.

And the campaign is starting with a drive to increase transparency in the sector.

From April 1, any charges not included on lists issued by China's banks are considered a violation and will be penalized. From March 1, any unreasonable conditions attached to loans have been subjected to penalties, according to an announcement at a China Banking Regulatory Commission news conference on Friday.

"Any violation we find will be punished. And we will encourage public scrutiny," Yang Jiacai, a senior CBRC official, said at the news conference. Members of the public can report violations on a special hotline.

The CBRC earlier required all banks to publicize their charges, either in brochures available in their branches or on their websites.

All of the four largest Chinese banks - Industrial and Commercial Bank of China, China Construction Bank, Bank of China and Agricultural Bank of China - have chosen to publicize this information in brochures available in their branches.

Monitoring groups will be dispatched to local banks and the CBRC's local bureaus to oversee the enforcement of the measures. Violators will be fined from one to five times the amount of money involved in the violation, Yang said.

Driven by profits, the list of charges has grown rapidly at China's increasingly commercialized banks.

For example, the number of products provided by ICBC, the country's largest bank, rose from 887 in 2005 to 3,243 at the end of 2011, according to a statement on its website.

And the short supply of capital in the past year has encouraged banks to attach unreasonable conditions to loans, sparking an outcry from customers.

These are also complaints about a lack of information on specific charges.

Wang Lin, a businessman, said he had been charged 4,200 yuan ($666) by a bank for financial statements over the past 47 months.

"I was not told about the charge when I opened my account, nor have I received any notification since then," he said.

The CBRC also revealed a number of unreasonable conditions attached to loans, including forcing debtors to deposit part of the loan, converting part of the interest into fees, and tying loans to the sale of wealth management products, insurance and fund products.

Despite the CBRC's crackdown, there are still worries among small and medium-sized companies.

"Since it's extremely difficult for us to get loans, how can we dare report these misdeeds?" asked Wang Hongying, a sales manager at a carbon fiber manufacturer in Anshan, Liaoning province.

At present, the campaign is limited to the transparency issue. Yang said the CBRC's next step would be to evaluate if the banks' charges are reasonable.

zhengyangpeng@chinadaily.com.cn

(China Daily 04/07/2012 page9)