SHANGHAI (Reuters) – China unveiled tighter guidelines late on Thursday to better control its $1.3 trillion credit rating card market, urging loan providers to adopt a “prudent” progress approach, and monitor hazards extra closely.
Banking companies are also barred from working with the range of playing cards issued or market share as primary effectiveness metrics, and are demanded to cap the variety of dormant cards at 20% of overall, according to principles jointly published by China’s central lender, and the country’s banking regulator.
“China’s credit score card small business has been growing quickly, taking part in a important function in facilitating payment and usage,” the China Banking and Insurance plan Regulatory Commission (CBIRC) mentioned in a statement on its internet site accompanying the launch of the new regulations.
“Not too long ago, on the other hand, some banking companies … are lax in risk administration, and have behaved in methods that damage customers’ curiosity,” the regulator said.
Chinese banking companies have issued a whole of 800 million credit rating cards as of the end of 2021, with fantastic loans totalling 8.62 trillion yuan ($1.29 trillion), according to the People’s Lender of China. Roughly 86 billion yuan of credit card financial loans, or 1% of complete exceptional, are overdue for 6 months or for a longer time.
The new procedures have to have banking institutions to tighten scrutiny in excess of credit card financial loans, and strengthen danger management manage.
Banking institutions need to also set up a audio method to check, recognize, alert and reduce abuse in the credit rating card business enterprise, in accordance to the principles.
($1 = 6.7005 Chinese yuan renminbi)
(Reporting by Samuel Shen and Brenda Goh Editing by Shri Navaratnam)
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