SHANGHAI (Reuters) – China unveiled tighter policies late on Thursday to greater control its $1.3 trillion credit score card industry, urging loan providers to undertake a “prudent” development tactic, and monitor challenges more closely.
Financial institutions are also barred from utilizing the range of playing cards issued or market share as key functionality metrics, and are essential to cap the number of dormant playing cards at 20% of complete, in accordance to procedures jointly printed by China’s central lender, and the country’s banking regulator.
“China’s credit card enterprise has been growing rapidly, participating in a crucial purpose in facilitating payment and usage,” the China Banking and Insurance plan Regulatory Fee (CBIRC) claimed in a statement on its site accompanying the launch of the new regulations.
“Not too long ago, on the other hand, some financial institutions … are lax in danger management, and have behaved in ways that damage customers’ desire,” the regulator stated.
Chinese banks have issued a full of 800 million credit history cards as of the end of 2021, with remarkable loans totalling 8.62 trillion yuan ($1.29 trillion), in accordance to the People’s Financial institution of China. Approximately 86 billion yuan of credit rating card financial loans, or 1% of complete remarkable, are overdue for six months or for a longer time.
The new regulations have to have banking institutions to tighten scrutiny in excess of credit rating card loans, and improve hazard administration management.
Banks must also set up a sound procedure to observe, establish, inform and stop abuse in the credit rating card business enterprise, in accordance to the rules.
($1 = 6.7005 Chinese yuan renminbi)
(Reporting by Samuel Shen and Brenda Goh Modifying by Shri Navaratnam)
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