CM BANK Nanjing Branch, along with Yongtai County Rural Credit Cooperative and Yichun Rural Commercial Bank, were penalized on August 7, 2026, by financial regulatory authorities in Jiangsu, Fujian, and Jiangxi provinces. The common charge across all three institutions was the improper setup of performance appraisal indicators. This marks a shift in regulatory focus from penalizing specific business violations to directly targeting the incentive system that drives such misconduct.
In Jiangsu, CM BANK Nanjing Branch was fined 600,000 yuan for setting illegal performance appraisal indicators, compounded by failures in post-loan management for personal loans, inadequate investigation of factoring business, and insufficient due diligence for fixed-asset loans. The Qixia Sub-branch was fined 250,000 yuan, and the Yancheng Branch was fined 300,000 yuan, bringing the total to 1.15 million yuan. Three responsible individuals, including Zuo Rong, Zou Yu, and Wu Xing, were warned and fined a combined 170,000 yuan.
In Fujian, Yongtai County Rural Credit Cooperative was fined 1.5 million yuan for several issues: inadequate pre-loan investigation and post-loan management for personal operating loans, illegal performance appraisal indicator settings, poor post-loan management for self-revolving personal loans, and improper management of loan rollovers and restructured loans. Individual Ling Ting was warned and fined 50,000 yuan.
In Jiangxi, Yichun Rural Commercial Bank was fined 900,000 yuan for illegally setting deposit assessment targets, data inaccuracy, and artificially inflating deposit and loan scales. Two individuals, Lin Lin and Hu Xiyang, were warned and fined a combined 180,000 yuan.
These three cases, involving a joint-stock bank branch, a county-level rural credit cooperative, and a city-level rural commercial bank, all applied a dual penalty system targeting both the institution and the responsible individuals.
Looking at the broader regulatory landscape, the Financial Regulatory Authority’s January 2026 work conference designated "deeply rectifying disorderly competition and continuously standardizing industry order" as a key annual task. In June, an expanded party committee meeting further emphasized "deeply rectifying disorderly competition in the financial sector, promoting a shift from pursuing speed and scale to focusing on quality and efficiency, and continuously enhancing core competitiveness." The July mid-year work conference reinforced this direction. The August 7 penalties in three provinces represent the implementation of this top-level strategy at the provincial level.
Regulatory bodies in Jilin, Guangdong, and other regions have already begun translating these rectification requirements into concrete mechanisms. The Jilin Financial Regulatory Bureau has established a disorderly competition monitoring and reporting mechanism, tracking quarterly activities such as "scrambling for deposits," "scrambling for loans," and "scrambling for fees." The Guangdong Bureau has built a big data screening model to specifically identify disorderly competitive behaviors like inflating deposit and loan figures at period-end, illegally replacing other banks' existing business, and offering low-interest loans improperly.
With local monitoring mechanisms in place and centralized penalties following, a regulatory feedback loop is forming. When deposit and loan volume targets are written into hard performance appraisals, frontline staff are often forced to meet them, leading to data distortion, scale inflation, and lax post-loan management. By directly punishing the appraisal system itself, regulators are shifting compliance pressure from frontline executors back to the head office and branch-level rule-makers.
Currently, the net interest margin of the banking industry has narrowed to 1.40%, down from 1.42% at the end of 2025 in the first quarter of 2026. At this level, continuing to use short-term performance-driven appraisal indicators to push frontline staff to hit period-end targets and grab market share is detrimental to long-term development. The regulatory crackdown, strictly treating non-compliant performance appraisals as violations in themselves, may be a necessary step to gradually break free from the trap of problematic indicators.
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