China tightens rules on $1.3 trln credit card business
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SHANGHAI, July 8 (Reuters) – China unveiled tighter guidelines late on Thursday to improved control its $1.3 trillion credit card sector, urging creditors to adopt a “prudent” expansion approach, and observe challenges much more intently.
Banks are also barred from applying the number of playing cards issued or current market share as major general performance metrics, and are necessary to cap the range of dormant playing cards at 20% of complete, in accordance to procedures jointly printed by China’s central bank, and the country’s banking regulator.
“China’s credit rating card enterprise has been increasing promptly, actively playing a essential part in facilitating payment and consumption,” the China Banking and Insurance policy Regulatory Commission (CBIRC) reported in a statement on its web site accompanying the launch of the new guidelines.
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“A short while ago, having said that, some banking companies … are lax in danger management, and have behaved in methods that hurt customers’ curiosity,” the regulator reported.
Chinese banking companies have issued a overall of 800 million credit history playing cards as of the finish of 2021, with excellent financial loans totalling 8.62 trillion yuan ($1.29 trillion), according to the People’s Bank of China. Approximately 86 billion yuan of credit score card loans, or 1% of total exceptional, are overdue for 6 months or lengthier.
The new procedures involve financial institutions to tighten scrutiny over credit rating card financial loans, and bolster threat administration command.
Banking institutions have to also set up a seem process to observe, recognize, alert and avert abuse in the credit score card business enterprise, in accordance to the regulations.
($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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