SHANGHAI (Reuters) – China unveiled tighter regulations late on Thursday to far better regulate its $1.3 trillion credit score card marketplace, urging creditors to undertake a “prudent” progress approach, and monitor hazards a lot more carefully.
Banking companies are also barred from utilizing the range of cards issued or sector share as primary general performance metrics, and are essential to cap the number of dormant playing cards at 20% of whole, according to regulations jointly posted by China’s central lender, and the country’s banking regulator.
“China’s credit score card company has been escalating rapidly, playing a key position in facilitating payment and usage,” the China Banking and Insurance policies Regulatory Commission (CBIRC) mentioned in a statement on its website accompanying the release of the new rules.
“A short while ago, even so, some banks … are lax in danger administration, and have behaved in ways that hurt customers’ curiosity,” the regulator stated.
Chinese financial institutions have issued a total of 800 million credit rating playing cards as of the conclude of 2021, with superb financial loans totalling 8.62 trillion yuan ($1.29 trillion), in accordance to the People’s Lender of China. About 86 billion yuan of credit score card financial loans, or 1% of whole fantastic, are overdue for six months or extended.
The new procedures call for banking institutions to tighten scrutiny in excess of credit rating card financial loans, and improve risk management regulate.
Financial institutions need to also established up a audio process to check, identify, inform and protect against abuse in the credit score card business, according to the procedures.
($1 = 6.7005 Chinese yuan renminbi)
(Reporting by Samuel Shen and Brenda Goh Modifying by Shri Navaratnam)
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