SHANGHAI (Reuters) – China unveiled tighter rules late on Thursday to much better control its $1.3 trillion credit history card marketplace, urging loan companies to adopt a “prudent” expansion strategy, and watch threats additional intently.
Banks are also barred from working with the quantity of playing cards issued or market share as most important performance metrics, and are necessary to cap the selection of dormant cards at 20% of total, in accordance to guidelines jointly revealed by China’s central bank, and the country’s banking regulator.
“China’s credit score card organization has been growing promptly, participating in a key position in facilitating payment and use,” the China Banking and Insurance coverage Regulatory Fee (CBIRC) mentioned in a assertion on its website accompanying the launch of the new rules.
“Not long ago, on the other hand, some financial institutions … are lax in risk administration, and have behaved in ways that hurt customers’ curiosity,” the regulator explained.
Chinese banks have issued a whole of 800 million credit playing cards as of the conclude of 2021, with superb financial loans totalling 8.62 trillion yuan ($1.29 trillion), according to the People’s Lender of China. About 86 billion yuan of credit history card loans, or 1% of total superb, are overdue for 6 months or for a longer time.
The new principles need banks to tighten scrutiny in excess of credit score card loans, and fortify threat administration manage.
Banks should also set up a sound system to keep track of, recognize, inform and prevent abuse in the credit score card business, in accordance to the principles.
($1 = 6.7005 Chinese yuan renminbi)
(Reporting by Samuel Shen and Brenda Goh Modifying by Shri Navaratnam)
Copyright 2022 Thomson Reuters.