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SHANGHAI, July 8 (Reuters) – China unveiled tighter policies late on Thursday to greater regulate its $1.3 trillion credit rating card industry, urging loan providers to adopt a “prudent” growth technique, and check challenges much more carefully.
Banks are also barred from applying the variety of playing cards issued or industry share as most important general performance metrics, and are expected to cap the range of dormant cards at 20% of full, according to rules jointly printed by China’s central financial institution, and the country’s banking regulator.
“China’s credit history card business has been rising quickly, enjoying a important position in facilitating payment and intake,” the China Banking and Insurance coverage Regulatory Commission (CBIRC) claimed in a assertion on its internet site accompanying the release of the new procedures.
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“Just lately, even so, some financial institutions … are lax in risk management, and have behaved in approaches that damage customers’ fascination,” the regulator mentioned.
Chinese banking institutions have issued a full of 800 million credit score playing cards as of the close 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 score card financial loans, or 1% of full remarkable, are overdue for six months or more time.
The new rules demand banking companies to tighten scrutiny about credit rating card loans, and strengthen chance administration control.
Banking companies have to also established up a audio procedure to monitor, detect, alert and stop abuse in the credit history card business, in accordance to the procedures.
($1 = 6.7005 Chinese yuan renminbi)
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Reporting by Samuel Shen and Brenda Goh
Editing by Shri Navaratnam
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