The bank regulator, the CBRC, is already tightening regulations around wealth management products and local government lending.
The Wealth Management segment includes wealth management products and services such as trust activities, commercial insurance and credit related products, and investment management.
Meanwhile, those investments in wealth management products are worrying banking analysts.
At its very essence, socialism is focused on opening up access and ownership of wealth, products and services to all or as much of the general population.
Under the arrangement, a participating company would take out a bank loan and give some of the money to Zhongdan for investing in high interest-paying wealth management products for a month or more.
The RBI said it is also separately carrying out a study of all banks that sell gold coins and wealth management products to examine whether there are any loopholes in the rules governing sales of such products.
China's major banks have already grown more conservative in how they issue wealth-management products.
The China Banking Regulatory Commission said on Wednesday that banks must clearly link wealth-management products with specific assets.
Banks are banned from investing more than 35% of the total proceeds from the sale of wealth-management products in loans.
For example, the rules stated that banks must link wealth-management products with the actual assets that proceeds are invested in.
One consequence: a higher proportion of wealth-management products must be invested in highly liquid money-market and bond-market instruments, which offer lower returns.
The so-called shadow banking industry, an unregulated and fast-rising world of high-yield wealth-management products and underground lending, also continues to worry investors.
The so-called "shadow banking" industry, an unregulated and fast-growing world of high-yield wealth-management products and underground lending, also continues to worry investors.
Meanwhile, ordinary depositors fed up with low savings rates prefer to put their money to work in wealth-management products sold via banks.
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They are called wealth-management products, which some Chinese regulators have said are sold with limited oversight or disclosure of what they contain.
's outstanding wealth-management products were lower than a year earlier, down 12%.
Much credit creation now happens off balance sheets, whether through so-called wealth-management products at banks or special funds set up by local governments.
China's city and rural commercial banks accounted for 43% of the wealth-management products issued in January, up from 33% issued a year earlier.
Meanwhile, Asian markets slumped, highlighted by a 2.8% tumble in China's Shanghai Composite after the country's banking regulator unveiled new controls on popular wealth-management products.
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"Wealth-management products we issued used to be snapped out before the sales deadline, but now we find it hard to sell them all, " the manager said.
Jing, who is based in Hong Kong, says Chinese regulators are paying close attention to the promised returns from wealth-management products, particularly those that promise the sky.
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Banks typically pool funds raised by wealth-management products and invest the money in poorly disclosed assets or projects, leading to a lack of clarity about the underlying assets.
Bank of China's Beijing branches sold 5.5 billion yuan in wealth-management products in April, down sharply from 14 billion yuan in March, according to a source with direct knowledge of the matter.
Hong Kong's Hang Seng Index fell 0.1% to 22337.49, as banks dropped following the China Banking Regulatory Commission's tighter rules on wealth-management products, which is expected to restrain smaller banks' earnings growth.
Its statement also said that outside of the formal bond market, no more than 35% of a bank's total issued wealth-management products should be invested in debt or used to make loans.
He added that flexible interest rates offered by banks on wealth-management products, which are commonly higher than those on regular deposits and have become popular with investors, are a step toward full liberalization.
Secondly there is the credit risk issue attached to the mushrooming of wealth-management products, an asset class of uncertain size and quality which banks created in order to attract deposits with higher rates of return.
The bank is issuing fewer wealth-management products invested in illiquid instruments such as loans to investment trusts, and more that are invested in liquid but lower-yielding assets such as bonds and money-market instruments, the person said.
The report also said that the smaller banks were offering returns significantly higher than the major banks, "which may reflect the small banks' more risky asset-allocation strategies for higher yields" to compete for sales of wealth-management products.
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