China drafts rules for overseeing trust firms to curb shadow banking

The once-freewheeling trust industry, at the heart of a vast shadow banking sector, for years helped channel funds into companies that struggle to obtain bank credit via opaque structures

China's banking and insurance regulator issued draft rules on Friday to step up oversight of the $3 trillion trust industry, and reduce financial risks in the shadow banking sector.

The China Banking and Insurance Regulatory Commission (CBIRC) said trust companies should divide their businesses into three categories - asset management, asset servicing and charitable trusts - to help them align with international standards and to encourage them to return to their original business.

The once-freewheeling trust industry, at the heart of a vast shadow banking sector, for years helped channel funds into companies that struggle to obtain bank credit via