China Tightens Rules on $1.3 Trln Credit Card Business | Investing News
SHANGHAI (Reuters) – China unveiled tighter policies late on Thursday to greater control its $1.3 trillion credit card marketplace, urging loan companies to undertake a “prudent” progress technique, and watch pitfalls a lot more intently.
Banking institutions are also barred from working with the quantity of playing cards issued or current market share as key performance metrics, and are necessary to cap the amount of dormant playing cards at 20% of complete, in accordance to principles jointly posted by China’s central bank, and the country’s banking regulator.
“China’s credit rating card small business has been rising quickly, enjoying a crucial job in facilitating payment and use,” the China Banking and Insurance coverage Regulatory Fee (CBIRC) stated in a statement on its web site accompanying the release of the new guidelines.
“Recently, on the other hand, some banks … are lax in risk administration, and have behaved in means that hurt customers’ fascination,” the regulator mentioned.
Chinese banks have issued a whole of 800 million credit history cards as of the close 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 financial loans, or 1% of complete remarkable, are overdue for six months or longer.
The new regulations demand banks to tighten scrutiny in excess of credit rating card financial loans, and strengthen possibility management management.
Banking companies ought to also set up a seem method to monitor, identify, alert and stop abuse in the credit score card enterprise, in accordance to the regulations.
($1 = 6.7005 Chinese yuan renminbi)
(Reporting by Samuel Shen and Brenda Goh Modifying by Shri Navaratnam)
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