China’s bank regulator has tightened requirements on the internet loan business of commercial banks.
The decision comes amid heightened scrutiny of online lending provided by internet large companies such as Ant Group, the finance arm of Alibaba Group. Commercial banks must jointly contribute funds to issue internet loans with a partner, and the proportion of capital from the partner in a loan should not be less than 30%, Reuters cited a notice from the China Banking and Insurance Regulatory Commission.
The balance of internet loans issued by a bank with one partner, including its related parties, must not exceed 25% of the bank’s net tier-one capital, it said. Moreover, the balance of internet loans issued jointly by commercial banks and cooperative institutions may not exceed 50% of the bank’s total balance.
In a separate Q&A document, the regulator said firms must comply with the new rules by July 17, 2022.
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