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SHANGHAI, July 8 (Reuters) – China unveiled tighter policies late on Thursday to much better regulate its $1.3 trillion credit card business, urging lenders to adopt a “prudent” expansion method, and watch dangers far more carefully.
Financial institutions are also barred from using the selection of playing cards issued or current market share as most important functionality metrics, and are needed to cap the number of dormant playing cards at 20% of complete, according to procedures jointly revealed by China’s central bank, and the country’s banking regulator.
“China’s credit rating card organization has been escalating rapidly, playing a crucial role in facilitating payment and use,” the China Banking and Coverage Regulatory Commission (CBIRC) reported in a assertion on its site accompanying the release of the new rules.
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“Just lately, nevertheless, some financial institutions … are lax in danger management, and have behaved in ways that damage customers’ fascination,” the regulator explained.
Chinese banking companies have issued a overall of 800 million credit history playing cards as of the finish of 2021, with remarkable financial loans totalling 8.62 trillion yuan ($1.29 trillion), in accordance to the People’s Financial institution of China. About 86 billion yuan of credit card loans, or 1% of complete excellent, are overdue for 6 months or more time.
The new rules call for banks to tighten scrutiny over credit card loans, and bolster possibility administration regulate.
Banking companies need to also set up a sound method to keep an eye on, detect, alert and avert abuse in the credit card small business, in accordance to the regulations.
($1 = 6.7005 Chinese yuan renminbi)
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Reporting by Samuel Shen and Brenda Goh
Modifying by Shri Navaratnam
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