The China Banking and Insurance Regulatory Commission (CBIRC) has launched trials to accelerate the disposal of personal non-performing loans (NPL’s).
CBIRC issued the “Notice Concerning the Undertaking of Non-Performing Loan Transfer Trial Work” (关于开展不良贷款转让试点工作的通知) on 12 January, stating that NPL’s for the trial would include:
- Corporate NPL’s (单户对公不良贷款);
- Bulk personal NPL’s (批量个人不良贷款).
Under the trials Chinese banks will be permitted to transfer entity corporate loans and personal NPL’s in bulk to asset management companies (AMC’s) and local AMC’s.
Local AMC’s will be permitted to accept corporate NPL’s from banks within the same provincial jurisdiction, although no regional restrictions will apply to the bulk acceptance of personal NPL’s.
Personal NPL’s included in the trial are also confined to:
- Personal consumer credit loans;
- Credit card overdrafts;
- Personal business credit loans.
Analysts point out that the Notice differs from the draft version issued in 2020, which also included mortgage and vehicle loans under the personal NPL’s that qualify for the trials.
The first group of participants in the trials will include the big six state-owned banks and 12 joint-stock banks that operate in China on a nationwide basis, as well as AMC’s, qualified local AMC’s and financial asset investment companies.