Online Financial Institutions Integrated into China’s Credit System


The Chinese central bank is pressing ahead with efforts to incorporate online financial institutions in the country’s broader credit system.

Chen Yulu (陈雨露), vice-governor of the People’s Bank of China (PBOC), said at press conference held on 10 March that China’s credit system currently employs a “two wheel development model” of “government + markets,” with PBOC’s credit centre responsible for maintaining a state credit information foundational database (国家信用信息基础数据库) that operates in tandem with market-based credit service providers.

“At present there are 125 corporate credit institutions on the market and 97 credit assessment entities, of which over 80% are privately invested and founded.

“Since 2017, in order to satisfy the information sharing needs of online finance there has also been an effective supply of personal credit…the People’s Bank of China has approved the country’s first market-based personal credit organisation – Baihang Credit (百行征信), which has currently signed agreements to integrate the credit information of over 600 institutions.”

8 key founding institutions and members of the National Internet Finance Association (NIFA) collaborated on the establishment of Baihang Credit’s database and also actively participate in the company’s decision-making processes.

“We hope that market-based credit institutions including Baihang Credit will be able to rapidly upgrade their innovation and competitive capabilities, enabling the market’s credit services to become stronger and greater,” said Chen Yulu.

“Because the threshold for entry into online finance is comparatively low, regulators have not yet clarified the legal position of financial institutions and an industry regulatory framework,” said one industry source to Securities Daily.

“The incorporation of online financial institutions into the credit system undoubtedly possesses major significance…it’s an inevitable part of the establishment of a credit system, as well as a key guarantor of the healthy, orderly development of the sector.

“On the one hand, this will firmly contain and strike against malignant lending behaviour, maintain the rights and interests of lenders, and achieve the long-term stable growth of platforms.

“On the other hand it also undertakes the appropriate responsibilities for the creation of industry credit mechanisms and a social credit system.”

The source also pointed to prevailing obstacles to the incorporation of China’s online financial institutions into the broader credit system.

“”It’s still very difficult for some institutions in the sector to satisfy the basic requirements of the central bank credit system with regard to data standardisation, compliant data reporting capability, data security mechanisms, as well as systems for the protection of user confidentiality.

“Additionally, institutions in the online finance sector are highly variable in their technical capabilities, and there will be technical difficulties in exchanging information with the central bank credit system.”