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SHANGHAI, July 8 (Reuters) – China unveiled tighter regulations late on Thursday to far better control its $1.3 trillion credit history card market, urging loan companies to adopt a “prudent” growth strategy, and observe challenges more carefully.
Banking institutions are also barred from using the quantity of playing cards issued or marketplace share as most important overall performance metrics, and are demanded to cap the range of dormant cards at 20% of full, according to procedures jointly released by China’s central financial institution, and the country’s banking regulator.
“China’s credit history card organization has been rising promptly, playing a important part in facilitating payment and consumption,” the China Banking and Insurance policy Regulatory Fee (CBIRC) explained in a statement on its web-site accompanying the release of the new rules.
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“Not too long ago, on the other hand, some banking companies … are lax in chance management, and have behaved in methods that harm customers’ curiosity,” the regulator claimed.
Chinese banking companies have issued a total of 800 million credit cards as of the conclude of 2021, with outstanding financial loans totalling 8.62 trillion yuan ($1.29 trillion), according to the People’s Lender of China. Around 86 billion yuan of credit rating card loans, or 1% of total excellent, are overdue for six months or for a longer period.
The new policies have to have banking institutions to tighten scrutiny over credit history card loans, and strengthen hazard administration command.
Banking companies will have to also set up a audio method to monitor, detect, inform and avoid abuse in the credit score card small business, in accordance to the rules.
($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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