China cracks down on cash loan firms with new rules: sources

BEIJING (Reuters) – China’s financial regulators on Friday circulated new regulations to local governments to clamp down on a rampantly growing cash loan sector, according to two sources with direct knowledge of the matter and a notice reviewed by Reuters.

A top-level multi-ministry body, tasked by the central government to rein in risks in the Internet finance sector, said in the notice unlicensed organizations and individuals were not allowed to conduct lending business.

Lending institutions are also not allowed to give loans to borrowers who have no income source or mislead consumers into over-borrowing, according to the notice.

Online micro-loans cannot be used for stock market speculation or property downpayment, it said.

Institutions are forbidden from charging interest rates that do not comply with the law, and from conducting violent debt collection, it said.

The government also said institutions were not allowed to steal, leak or sell clients’ private information.

Banks are also restricted from providing funding to unlicensed institutions, the notice said.

Banks’ asset management products are not allowed to invest in asset-backed securitization products backed by cash loans, campus loans or property downpayment loans, the notice said.

Financial regulators are responsible for the cleanup of micro-loan problems in their respective regions, the notice said.

Institutions should increase risk control and are not allowed to hide non-performing assets, according to the notice.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.