China tightens rules on $1.3 trln credit card business

People today movie the new indicator of China Banking and Insurance policies Regulatory Fee (CBIRC), the freshly merged regulatory human body, at its workplace in Beijing, China April 8, 2018. REUTERS/Stringer

SHANGHAI, July 8 (Reuters) – China unveiled tighter guidelines late on Thursday to improved regulate its $1.3 trillion credit card field, urging lenders to adopt a “prudent” expansion technique, and watch dangers additional closely.

Financial institutions are also barred from applying the quantity of cards issued or current market share as key performance metrics, and are demanded to cap the number of dormant playing cards at 20% of whole, in accordance to guidelines jointly posted by China’s central lender, and the country’s banking regulator.

“China’s credit history card organization has been increasing promptly, actively playing a important purpose in facilitating payment and intake,” the China Banking and Insurance Regulatory Fee (CBIRC) explained in a statement on its web site accompanying the launch of the new policies.

“Lately, nevertheless, some banking companies … are lax in possibility administration, and have behaved in means that harm customers’ curiosity,” the regulator mentioned.

Chinese banking institutions have issued a full of 800 million credit history playing cards as of the conclusion of 2021, with fantastic financial loans totalling 8.62 trillion yuan ($1.29 trillion), in accordance to the People’s Financial institution of China. Approximately 86 billion yuan of credit card financial loans, or 1% of complete exceptional, are overdue for 6 months or more time.

The new guidelines demand banking companies to tighten scrutiny above credit score card financial loans, and fortify possibility administration management.

Banking institutions must also established up a seem program to keep track of, determine, notify and stop abuse in the credit history card organization, in accordance to the rules.

($1 = 6.7005 Chinese yuan renminbi)

Reporting by Samuel Shen and Brenda Goh
Editing by Shri Navaratnam

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