Chongqing cracks down on microlenders

The local government of Southwest China’s Chongqing municipality, where microlenders are highly concentrated, has recently taken steps to rein in the risks posed by the region’s rapidly growing unsecured short-term loan sector. Chongqing’s moves come at a time when the China Banking Regulatory Commission (CBRC) is mulling how to rein in the sprawling sector, which has been criticized for problematic practices. The municipal government of Chongqing has asked microlenders to conduct a week-long self-assessment on the tenors and interest rates of loans, target clientele and sources of funding, sources told Caixin. They added that the bad-loan ratio is not part of this assessment. It will then be followed by on-site inspections by the government that will focus on the size of their loan book and interest rates they charge, these people said. “People from the government of our district were here for two days, bringing accountants with them to audit our books,” said a senior executive from a Chongqing-based microlender.