The Asia Global Payment Summit. Bali, Indonesia. 10-11 October 2019

PBOC Lifts Centralised Customer Deposit Ratio for Online Payment Companies

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The Chinese central bank has announced that it will raise the centralised customer deposit ratio for payment companies to roughly 50% from around 20% at present, as part of efforts to tighten regulation of the burgeoning fintech sector.

In an interview with PBOC’s official news publication, an official from the central bank’s open markets operations office said that the move was intended to contain risk in relation to online financing, and would not have an impact upon liquidity in the banking system.

“The payment organisation customer deposit centralised management system is a key measure for implementing the specialised rectification work policies and arrangements with respect to Internet finance risk of the party’s central committee and the State Council,” said the official.

“The system has enjoyed successful development since its establishment at the start of 2017, with various parties to the market already expecting an increase in the centralised deposit ratio.

“The current adjustment has given full consideration to the impact of seasonal factors such as cash disbursements in the lead up to Chinese New Year, and on the basis of the existing system, we have adopted step-by-step measures for stable implementation during the process of raising the deposit ratio.

“In January 2018 the current centralised deposit ratio of 20% will continue to be implemented, followed by a 10% increase for each month from February to April.

“By April 2017 the centralised deposit ratio will be adjusted to around 50%, while PBOC will also flexibly undertake open market operations based on specific circumstances, in order to offset the impact of adjustments to the centralised customer deposit ratio of payment organisations and maintain reasonably stable liquidity in the banking system.”

The move comes following a fraught year for Chinese Fintech, with Beijing cracking down on Internet micro-loan companies, initial coin offerings and the use of Bitcoins for financing purposes.

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