China tightens rules on $1.3 trln credit card business2 min read
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SHANGHAI, July 8 (Reuters) – China unveiled tighter regulations late on Thursday to greater regulate its $1.3 trillion credit rating card marketplace, urging lenders to undertake a “prudent” expansion strategy, and watch risks a lot more closely.
Banking institutions are also barred from making use of the range of playing cards issued or industry share as major overall performance metrics, and are expected to cap the variety of dormant cards at 20% of full, in accordance to regulations jointly published by China’s central financial institution, and the country’s banking regulator.
“China’s credit history card organization has been rising fast, playing a vital position in facilitating payment and consumption,” the China Banking and Insurance Regulatory Fee (CBIRC) said in a statement on its website accompanying the release of the new rules.
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“Lately, nevertheless, some banks … are lax in hazard management, and have behaved in means that harm customers’ fascination,” the regulator mentioned.
Chinese banking institutions have issued a complete of 800 million credit history playing cards as of the conclude of 2021, with remarkable loans totalling 8.62 trillion yuan ($1.29 trillion), according to the People’s Bank of China. Around 86 billion yuan of credit card loans, or 1% of complete exceptional, are overdue for six months or for a longer time.
The new policies involve banking companies to tighten scrutiny in excess of credit rating card financial loans, and strengthen chance management management.
Banking institutions should also established up a sound method to watch, identify, warn and reduce abuse in the credit card business, in accordance to the policies.
($1 = 6.7005 Chinese yuan renminbi)
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Reporting by Samuel Shen and Brenda Goh
Modifying by Shri Navaratnam
Our Expectations: The Thomson Reuters Trust Principles.