China regulator finalizes Internet bank lending guidelines



PHOTO: A man rides an electric bike past the China Banking and Insurance Regulatory Commission (CBIRC) building in Beijing, China on February 14, 2019. Photo taken on February 14, 2019 REUTERS / Stringer

SHANGHAI (Reuters) – China’s banking regulator on Saturday tightened demands on commercial banks’ online lending business amid increased focus on online lending from internet giants such as Ant Group Co, the financial arm of Alibaba Group Holding Ltd.

Commercial banks must jointly contribute funds to issue online loans to a partner, and the partner’s equity in the loan must not be less than 30%, according to a notice from the China Banking and Insurance Regulatory Commission.

It states that the balance of Internet loans issued by a bank with one partner, including its related parties, should not exceed 25% of the bank’s tier 1 net capital.

In addition, the balance of Internet loans issued jointly by commercial banks and cooperative institutions cannot exceed 50% of the bank’s total balance, the guide says. In a separate Q&A document, the regulator said firms must comply with the new rules by July 17, 2022.

The regulation will increase the potential capital requirements for technology platforms such as the Ant Group, which was set to raise $ 37 billion in an IPO based on its extensive range of online lending services.

Those hopes were dashed when China’s regulators stepped in to halt the November listing, amid fears that over-lending to consumer debt could threaten the country’s financial system.

Reporting by Josh Horwitz and Jing Wang in Shanghai and Cheng Leung in Beijing; Edited by William Mallard and Ross Russell


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