China tightens rules on $1.3 trln credit card business

SHANGHAI (Reuters) – China unveiled tighter principles late on Thursday to better regulate its $1.3 trillion credit card marketplace, urging loan companies to adopt a “prudent” development tactic, and check dangers extra intently.

Banking institutions are also barred from utilizing the selection of cards issued or market place share as most important general performance metrics, and are essential to cap the number of dormant cards at 20% of complete, according to principles jointly released by China’s central financial institution, and the country’s banking regulator.

“China’s credit score card business has been expanding quickly, actively playing a key role in facilitating payment and intake,” the China Banking and Insurance Regulatory Fee (CBIRC) said in a statement on its site accompanying the release of the new regulations.

“Lately, on the other hand, some banking institutions … are lax in chance administration, and have behaved in techniques that hurt customers’ interest,” the regulator stated.

Chinese banking companies have issued a full of 800 million credit history playing cards as of the end of 2021, with outstanding financial loans totalling 8.62 trillion yuan ($1.29 trillion), according to the People’s Bank of China. Approximately 86 billion yuan of credit score card loans, or 1% of whole outstanding, are overdue for six months or for a longer time.

The new rules call for banks to tighten scrutiny above credit card financial loans, and bolster threat management management.

Banks ought to also set up a seem process to observe, discover, alert and protect against abuse in the credit rating card business, according to the guidelines.

($1 = 6.7005 Chinese yuan renminbi)

(Reporting by Samuel Shen and Brenda Goh Editing by Shri Navaratnam)