Data out earlier this week show new loans in April dropping nearly 70 percent from figures posted just a month earlier, possibly on concerns about controlling risk from bad loans. The Chairman of China's Banking Watchdog, Liu Mingkang, says new measures are in the works for stronger management of risk that banks face when granting loans.

Data out earlier this week show new loans in April dropping  nearly 70 percent from figures posted just a month earlier,  possibly on concerns about controlling risk from bad loans.

Liu Mingkang said active investments also means more risks for the banking system. So the banking regulator will take measures to segregate the banking sector from risks in the fluctuating financial market.

Liu Mingkang, Chairman of China's Banking Regulatory Commission, says, "for example, the housing market may lead to financial risks, so we will strictly control loans to property developers and mortgages for the second or even third home. We will take measures to avoid risks accumulation and spreading and effectively segregate the banking system from financial risks. We will also continue to strengthen supervision on asset securitization in banking system. "

The China Banking Regulatory Commission rules state that banks can offer preferential mortgage interest rate to first-home buyers. But for second home buyers, banks are only allowed to offer preferential rates to those purchasing higher priced property.