A woman looking at a yuan note Photo: Reuters

Authorities in Suzhou, Beijing and Shenzhen have begun looking into the rise in consumer loans, as authorities move to prevent the flow of credit into the real estate market, the 21st Century Business Herald reported on Wednesday.

Medium- to long-term loans have slowed as of the first seven months this year, but short-term loans have seen a 713.7 billion yuan (US$109.25 billion) increase from the same period last year, the report added, hinting that the surge might be tied to the mortgage loan crackdown.

While credit loans are tightly controlled with banks able to trace the flow of the funds as well as know what each consumer has applied for, consumers are able to find legal loopholes around the situation, the report said.

A consumer can find a company to offer a tax rebate to the company which in turn will convert the credit amount to cash, the report said, citing an analyst. If banks wish to fully trace the credit path, it will also require a large sum of money and resources.

Although the three cities are each cracking down on the flow of credit loans to the real estate market, each is adopting a different measure. 

Beijing is requesting banks to check on applications for more than 200,000 yuan, as well as scrutinizing short-term consumer loans; while Shenzhen is shortening consumer loans to a maximum of 5 years, the report said, adding that Suzhou is requesting all commercial banks to submit monthly reports on large loans.