[photopress:MBA_credit_card.JPG,full,alignright]Difficult to believe that university students would ever act this way but it seems to be the case. The Shanghai branch of the China Banking Regulatory Commission has warned city banks to check carefully before issuing credit cards to university students. Some banks have been failing to check the credit worthiness of students and their ability to repay before issuing them with cards.
Many students have overdrawn their accounts and failed to repay the money.
In fairness, before the finger of shame is pointed at the students of Shanghai, this is a worldwide problem. And most of it caused by banks who in a mad scramble to issue credit cards have deluged users with offers.
In Shanghai local banks have handed out more than 170,000 credit cards to university students. Some banks did not even ask the students to state their income on the card applications and other banks told the students the guarantors would not be held responsible.
Precisely the same is true in Britain where the writer has intimate knowledge of one circumstance where an affectively indigent user was given 25 credit cards, each with seriously high spending limits.
The commission, quite correctly, categorized university students as unemployed people without a regular income. The simple extension of that is serious credit checking is needed. Issuing them cards but failing to check if they can repay encourages excessive consumption.
Banks now facing a good many bad debts on loans they gave to poor students to complete their studies.
Last September the Agricultural Bank of China’s Wujiaochang Branch took 96 university students to the court, demanding the repayment of loans. These students had finished their studies and should have begun repaying the loans but failed to do so.
The students were mainly from Fudan, Tongji and seven other universities. In total they owed the bank RMB762,800 ($101,706). But on the hearing day in Yangpu District People’s Court not one made an appearance. Court officials said many of the students were from outside Shanghai and had already left the city after they graduated. Students changing addresses and mobile phone numbers making it even harder for court officials to track them down.
As well as these 96 students, the bank is looking at up to another 4,000 similar cases.
Note our illustration is a CEIBS credit card. It seems unlikely that splendid university suffers the same problems.
Source Shanghai Daily