The Bank of China regulator has tightened requirements on commercial banks’ internet loan business, amid intense scrutiny of online lending by internet giants such as Ant Group Co, the financial arm of Alibaba Group Holding Ltd.
The China Banking and Insurance Regulatory Commission said in a notice that commercial banks should contribute joint funds to issue loans online with a partner and that the share of capital from the partner in the loan should not be less than 30%, according to Reuters.
She said that the balance of Internet loans issued by a bank with one partner, including related parties, should not exceed 25% of the bank’s first-degree net capital, in addition to that, the balance of Internet loans issued jointly by commercial banks and institutions may not exceed Tawuniya 50% of the total balance of the bank, as stated in the guidelines.
In a separate question-and-answer document, the regulator said companies must comply with the new rules by July 17, 2022.
The regulations will increase the potential capital needs of technology platforms such as Ant Group, which was on its way to raising $ 37 billion in an initial public offering based on its wide range of online lending services.
Those hopes were dashed when Chinese regulators intervened to halt the listing in November, due to concerns that excessive consumer debt lending could pose a threat to the country’s financial system.