China Banking Regulatory Commission (CBRC) has fined 19 banks over a $3bn pledge loan fraud case in the Shaanxi and Henan provinces.

The Chinese banking regulator imposed a fine of nearly CNY52.5m ($8.36m) on the banking institutions found guilty of approving loans to criminals, who illegally used low-purity gold as pledges.

Leading lenders such as Industrial and Commercial Bank of China (ICBC) and Postal Savings Bank of China (PSBC) were among the penalised banks.

In a statement, CBRC stated that this case found multiple defects in the internal controls and exposed poor management of loans by the banks which were exploited by the criminals.

A total of 104 employees were found guilty in this case where 35 criminals associated with the fraud were also arrested.

CBRC stated that in the pledged loan fraud, three PSBC branches were imposed a fine of CNY10m, while four ICBC branches were fined CNY6.5m.

Since the beginning of this year, it is third such event as the CBRC looks to increase crackdown over financial irregularities.

Last week, the regulator fined 12 lenders after it found illegal trading of bank bills amounting to CNY7.9bn.