China tightens rules on $1.3 trln credit card business

Folks film the new signal of China Banking and Insurance Regulatory Commission (CBIRC), the freshly merged regulatory overall body, at its business in Beijing, China April 8, 2018. REUTERS/Stringer

SHANGHAI, July 8 (Reuters) – China unveiled tighter procedures late on Thursday to better control its $1.3 trillion credit score card industry, urging lenders to undertake a “prudent” expansion system, and keep an eye on dangers additional carefully.

Financial institutions are also barred from working with the selection of cards issued or market share as principal overall performance metrics, and are demanded to cap the amount of dormant playing cards at 20% of full, according to procedures jointly posted by China’s central financial institution, and the country’s banking regulator.

“China’s credit history card small business has been increasing speedily, enjoying a crucial position in facilitating payment and use,” the China Banking and Insurance policies Regulatory Fee (CBIRC) explained in a assertion on its web-site accompanying the launch of the new procedures.

“Just lately, even so, some banks … are lax in risk management, and have behaved in strategies that hurt customers’ curiosity,” the regulator mentioned.

Chinese banks have issued a overall of 800 million credit cards as of the conclusion of 2021, with outstanding financial loans totalling 8.62 trillion yuan ($1.29 trillion), in accordance to the People’s Bank of China. Around 86 billion yuan of credit score card loans, or 1% of complete exceptional, are overdue for six months or lengthier.

The new procedures involve banks to tighten scrutiny around credit history card loans, and strengthen chance administration control.

Banking companies should also established up a sound process to observe, recognize, warn and prevent abuse in the credit score card company, according to the guidelines.

($1 = 6.7005 Chinese yuan renminbi)

Reporting by Samuel Shen and Brenda Goh
Enhancing by Shri Navaratnam

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