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SHANGHAI, July 8 (Reuters) – China unveiled tighter procedures late on Thursday to better control its $1.3 trillion credit history card industry, urging lenders to undertake a “prudent” expansion approach, and check threats a lot more intently.
Banking institutions are also barred from employing the range of cards issued or sector share as major efficiency metrics, and are required to cap the number of dormant cards at 20% of whole, in accordance to rules jointly printed by China’s central lender, and the country’s banking regulator.
“China’s credit score card business has been increasing promptly, enjoying a critical job in facilitating payment and use,” the China Banking and Insurance plan Regulatory Commission (CBIRC) explained in a assertion on its web-site accompanying the release of the new rules.
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“Just lately, nonetheless, some financial institutions … are lax in danger management, and have behaved in means that damage customers’ interest,” the regulator said.
Chinese banking institutions have issued a complete of 800 million credit rating playing cards as of the stop of 2021, with fantastic 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 rating card financial loans, or 1% of full fantastic, are overdue for 6 months or longer.
The new rules require banking institutions to tighten scrutiny over credit history card loans, and reinforce risk administration control.
Banking companies need to also set up a seem technique to keep an eye on, identify, notify and reduce abuse in the credit score card enterprise, in accordance to the policies.
($1 = 6.7005 Chinese yuan renminbi)
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Reporting by Samuel Shen and Brenda Goh
Editing by Shri Navaratnam
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