The China Banking Regulatory Commission (CBRC) has imposed a fine of RMB461.75m ($72.16m) on Chengdu branch of Shanghai Pudong Development Bank (SPDB) for covering up bad loans by offering huge credit to shell firms.

During the probe, the Chinese banking regulator found that SPDB’s Chengdu office forged the loan applications and offered other unapproved funds to cover up its pile of bad debts.

The CBRC slammed the bank for failing to flag a major fraud at it Chengdu branch when it provided RMB77.5bn in credit to 1,493 bogus companies.

Local banking regulatory officials and SPDB senior management including the branch’s former president and two vice-presidents were banned for life for their negligence and inability to stop the widespread fraud.

Apologising to investors, the Shanghai-based bank said it admits to the wrongdoings and fully accepts the penalty.

Further, the bank’s Chengdu branch also agreed to the CBRC’s request for remedial action in order to avoid occurrence of such incidents in the future.