(Written with details, backgrounds)
BEIJING, Nov 3 (Reuters) – China’s central bank and regulators released draft rules on Monday aimed at tightening oversight of online microcredit as it tries to rein in rising debt levels in the affected economy. by the coronavirus.
Draft rules from the People’s Bank of China (PBOC) and the China Banking and Insurance Regulatory Commission (CBIRC) aim to raise the bar for micro-lenders to provide online loans directly to consumers or together with the banks, while limiting the amount they can lend.
Regulators are focusing more on banks that are heavily using micro-lenders or third-party technology platforms like Ant Group to underwrite consumer loans, amid fears of rising defaults and worsening asset quality. Chinese banks’ consumer loans from tech companies hit 1.43 trillion yuan ($213.71 billion) at the end of June, according to the PBOC.
The draft, which is open for public comment until December 2, sets a new requirement for small online lenders to provide at least 30% of any loan they finance jointly with banks.
They also set a registered capital threshold of 5 billion yuan for micro-lenders offering online loans in different regions. The current threshold varies from province to province, but is well below 1 billion yuan.
Micro-lenders that source borrower data from e-commerce platforms to assess their credit will be required to share credit information with the central bank, under the draft rules.
Analysts had expected banks to become more cautious about co-lending to consumer fintech lenders.
Guo Wuping, head of the consumer protection division at CBIRC, said in a comment on Monday that the rights of users of consumer loan companies owned by Ant Huabei and Jiebei deserve careful consideration. Guo said these fintech lending companies effectively perform the functions of banks and should adopt similar risk controls.
Eligible lenders’ licenses will be renewed every three years, according to the draft rules, under which regulators will in principle not approve new micro-lenders who lend online in all regions.
Lenders will have 12 months to comply with the new rules once they are official. ($1 = 6.6914 Chinese yuan) (Reporting by Cheng Leng, Zhang Yan and Tom Daly; Additional reporting by Julie Zhu in Hong Kong; Editing by Catherine Evans and Ana Nicolaci da Costa)