PBOC Warns Commercial Banks over Joint Consumer Loans Made via Ant Group Platforms


The People’s Bank of China (PBOC) has issued an emergency warning to Chinese commercial banks due to concerns over the joint provision of consumer loans via Ant Group’s online platforms.

Several sources from the banking sector said that PBOC recently issued them with the “Emergency Notice Concerning an Investigation into Online Joint Consumer Loans” (关于开展线上联合消费贷款调查的紧急通知) according to a report from 21st Century Business Herald on 27 July.

The Notice requires that all banks provide data on their consumer loan balances for financing provided via the Ant Credit Pay (蚂蚁花呗) and Ant Cash Now (蚂蚁借呗) platforms, alongside non-performing ratios, average rates of return and credit overdrafts.

One source for the banking sector said that the the Chinese central bank is mounting the investigation due to reports that the non-performing ratio for jointly provided online loans has been especially high during the COVID-19 pandemic.

“The central bank is perhaps concerned about these operations from the point of view of systemic risk,” said Hou Benqi (侯本旗) from the Asia-Pacific Future Financial Research Institute.

“Banks bear nearly all the risk, but client growth and risk control primarily depend upon the cooperating loan organisations.

“This cooperative model with asymmetric risk incentives harbours scary potential risk – if the cooperative loan organisation adopts excessive client strategies or implements data manipulation to expand scale, it’s too late to put on the brakes once the banks find out.”

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