China’s bank regulators issue notice of crackdown

China’s bank regulators, responding to public complaints, have issued a notice to crack down on the irregular practices and service fees of commercial banks.

The number of service fees charged by banks has increased from about 300 in 2003 to more than 3,000 in 2010.

But as the number of fees increased so have the complaints from the public, according to an article in the China daily newspaper.

The net profits of the 16 listed banks in China totalled 890 billion yuan (about 141 billion USD) in 2010 and 1.2 trillion yuan for the first nine months of 2011.

Seven mainland banks rank among the world’s top 10 most lucrative banks, with the Industrial and Commercial Bank of China (ICBC) at No. 1.

However, ICBC’s quality of service is hardly satisfactory.

Because of the limited intermediary businesses and immature financial derivatives’ trade in China, these banks depend heavily on rate margins and paid services for their profits.

The continuous growth of the consumer price index has led to years of negative interest rates for depositors, and the frequently increased interest rates for loans make rate margins a reliable profit source for banks.

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