The People’s Bank of China (PBOC) has adopted measures to strengthen regulation of online credit information in the wake of the breakneck growth of the country’s internet lending sector.
State media reports that PBOC plans to strengthen its online credit system as well as push for micro-lenders and other online lending entities to fully integrate with the credit information system..
The Chinese central bank hopes that the move will ensure full coverage of credit information in relation to internet finance and e-commerce.
Internet finance has recently enjoyed roaring growth by servicing the huge pool of customers that China’s traditional state-dominated financial sector has long neglected.
This rapid growth as well as the unregulated nature of the new sector has created significant risk however, with 2018 seeing a wave of P2P platform closures which triggered rare public protests in China, as well as a crackdown on the sector by regulators.
“Risk has arisen with regard to internet finance activities due to worsening information asymmetries, fraud and malicious regulatory breaches,” said Wang Cunzhi (万存知), head of PBOC’s credit information management department.
Wang said that credit information would be the corner stone to the healthy growth of internet finance, and for this reason the Chinese central bank is pushing for the active establishment of an internet credit system and optimisation of the online credit environment.
Wang said that in order to prevent and resolve risk in relation to P2P lending platforms, regulators would impose bans upon absconders from debt or those with poor credit standings, with an initial list of such P2P borrowers already entered into the credit system.
PBOC will push for micro-lenders and online lending institutions to use this as a foundation for mutual sharing of information and linked risk warnings, to rapidly identify and effectively resolve potential financial risk.
The Chinese central bank said that it would also exercise prudence in issuance of personal credit assessment licenses, and push for China’s first personal credit assessment company, Baihang Credit (百行征信) to work closely with it in order to “supplement advantages, and achieve credit information coverage of online finance and e-commerce.”
Baihang Credit has already executed credit information sharing cooperative agreements with 241 P2P lenders, micro-loan companies and consumer finance firms, with the provision of personal credit information services to the market expected to commence prior to 2019.
China’s Peak Online Finance Body Demands Reports on P2P Activities of Members
Is China’s P2P Crisis the Result of Regulatory Negligence
Shanghai’s Lujiazui Financial District Sees Protests over Failed P2P Platform