SHANGHAI (Reuters) – China unveiled tighter rules late on Thursday to improved regulate its $1.3 trillion credit card field, urging lenders to adopt a “prudent” advancement system, and observe challenges extra intently.
Banks are also barred from making use of the number of playing cards issued or sector share as main general performance metrics, and are required to cap the selection of dormant playing cards at 20% of overall, according to principles jointly released by China’s central financial institution, and the country’s banking regulator.
“China’s credit card business enterprise has been increasing fast, enjoying a vital position in facilitating payment and consumption,” the China Banking and Coverage Regulatory Commission (CBIRC) explained in a assertion on its site accompanying the launch of the new rules.
“Not long ago, having said that, some banking institutions … are lax in threat administration, and have behaved in strategies that harm customers’ curiosity,” the regulator stated.
Chinese banks have issued a whole of 800 million credit rating playing cards as of the conclude of 2021, with outstanding loans totalling 8.62 trillion yuan ($1.29 trillion), according to the People’s Bank of China. Roughly 86 billion yuan of credit card financial loans, or 1% of total superb, are overdue for 6 months or for a longer time.
The new regulations call for banks to tighten scrutiny in excess of credit rating card loans, and improve risk management manage.
Banks should also established up a seem technique to keep an eye on, recognize, notify and reduce abuse in the credit rating card business, in accordance to the guidelines.
($1 = 6.7005 Chinese yuan renminbi)
(Reporting by Samuel Shen and Brenda Goh Enhancing by Shri Navaratnam)
Copyright 2022 Thomson Reuters.