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SHANGHAI, July 8 (Reuters) – China unveiled tighter rules late on Thursday to greater regulate its $1.3 trillion credit rating card marketplace, urging loan providers to adopt a “prudent” growth approach, and keep an eye on risks far more carefully.
Banking institutions are also barred from utilizing the range of cards issued or market share as key functionality metrics, and are required to cap the number of dormant playing cards at 20% of full, according to guidelines jointly printed by China’s central financial institution, and the country’s banking regulator.
“China’s credit rating card enterprise has been developing swiftly, actively playing a crucial part in facilitating payment and consumption,” the China Banking and Insurance Regulatory Fee (CBIRC) stated in a statement on its web-site accompanying the launch of the new rules.
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“Lately, having said that, some banking companies … are lax in risk administration, and have behaved in ways that damage customers’ desire,” the regulator claimed.
Chinese financial institutions have issued a whole of 800 million credit playing cards as of the stop of 2021, with superb loans totalling 8.62 trillion yuan ($1.29 trillion), in accordance to the People’s Bank of China. Roughly 86 billion yuan of credit rating card financial loans, or 1% of total outstanding, are overdue for six months or for a longer period.
The new guidelines need banking companies to tighten scrutiny above credit history card financial loans, and improve threat management handle.
Banks must also established up a audio technique to keep an eye on, identify, inform and protect against abuse in the credit rating card enterprise, according to the principles.
($1 = 6.7005 Chinese yuan renminbi)
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Reporting by Samuel Shen and Brenda Goh
Enhancing by Shri Navaratnam
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