PBOC's Zhou calls on banks to avoid loans bubble

People's Bank of China Governor Zhou Xiaochuan said Friday banks should increase their provisioning for bad loans, while he criticized their failure to use a wider range for lending rates to properly weight risk.

Zhou told a conference that China needed to create proper markets for risk products and nonperforming assets so banks could better measure the worth of their loan portfolios.

Zhou said policies should avoid creating an asset bubble such as the one that affected Japan's economy.