According to Reuters, the China Banking Regulatory Commission (CBRC) has told institutions to investigate all of their deals in discounted commercial bills based on real transactions.
The move comes after misconduct in this area was discovered at a number of banks and is part of the nation's subsequent attempts to clamp down on risky lending.
Mike Werner, a China banking analyst with Sanford Bernstein, said it is not surprising that the CBRC is adding this extra pressure.
"There is some concern that some borrowers were using these discounted bills as collateral for further borrowing," he added.
One of the main functions of the CBRC is to come up with the supervisory rules and regulations that govern the nation's banking institutions, as well as to authorise the establishment of their business scope.
By Gary Cooper