China has told thee banks to boost loans to poor students struggling to pay their way through university or face the consequences.

The China Banking Regulatory Commission says banks must treat student loans as an important part of their work to guarantee the entry into universities by poor students.

It says commercial banks that fail to grant student loans in line with state policies and regulations will be investigated and prosecuted.

Some banks have backed off from the loans scheme, in which the government pays half the interest, because of rising repayment defaults caused by graduates failing to find jobs.

China launched subsidised loans for university students in 1999 as the cost of higher education began to soar, after the government ended full subsidies.

(CRI August 31, 2004)