SHANGHAI (Reuters) – China unveiled tighter rules late on Thursday to better control its $1.3 trillion credit card market, urging lenders to adopt a “prudent” expansion tactic, and keep an eye on pitfalls much more intently.
Banking companies are also barred from employing the variety of cards issued or marketplace share as principal effectiveness metrics, and are essential to cap the number of dormant playing cards at 20% of overall, in accordance to regulations jointly posted by China’s central bank, and the country’s banking regulator.
“China’s credit rating card business enterprise has been expanding promptly, actively playing a critical purpose in facilitating payment and consumption,” the China Banking and Insurance policy Regulatory Fee (CBIRC) reported in a statement on its website accompanying the release of the new principles.
“Not too long ago, having said that, some financial institutions … are lax in hazard administration, and have behaved in strategies that hurt customers’ interest,” the regulator claimed.
Chinese financial institutions have issued a overall of 800 million credit rating playing cards as of the finish of 2021, with fantastic financial loans totalling 8.62 trillion yuan ($1.29 trillion), according to the People’s Lender of China. Around 86 billion yuan of credit score card financial loans, or 1% of total superb, are overdue for six months or longer.
The new procedures require banks to tighten scrutiny more than credit history card financial loans, and bolster threat management manage.
Banks should also set up a sound technique to watch, determine, inform and stop abuse in the credit card small business, in accordance to the procedures.
($1 = 6.7005 Chinese yuan renminbi)
(Reporting by Samuel Shen and Brenda Goh Editing by Shri Navaratnam)
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