China will establish a ratings-based supervision system for licensed online microlenders as part of draft national rules to oversee them, the China Banking and Insurance Regulatory Commission (CBIRC) said, reported Caixin.
China’s banking regulator is drafting national online microlending regulations and planning a nationwide ratings-based management mechanism, according to a Tuesday report published by the official newspaper of the Chinese People’s Political Consultative Conference (CPPCC), the country’s top political advisory body.
Veteran banker and CPPCC member Xiao Gang proposed similar policies at the annual CPPCC session in March. Xiao was formerly China’s top securities regulator, head of Bank of China Ltd. and a central bank deputy governor.
Chinese financial regulators have in recent years tightened their grip on online microlending and the internet finance sector generally, such as peer-to-peer lending, amid concerns about booming household debt and illegal practices in the industry, including sky-high interest rates and the use of violence to force repayment. Many unlicensed online microlenders have been closed and issuance of online microlending licenses has been suspended since the end of 2017.