Alibaba’s MY Bank to offer cheap loans
Print Edition
Alibaba-backed digital lender MY Bank aims to provide 300 billion yuan (US$42.3 billion) of interest-free small and micro loans over five years to boost economic recovery.
The default rate of small loans has risen to a little over 2 percent since May, compared with around 1.5 percent before the COVID-19 outbreak, Chairman of MY Bank and President of Ant Group Hu Xiaoming told the MY Bank Microfinance Partner Conference yesterday.
It has worked with local lenders to extend small and micro loans to business owners and online merchants with a one month interest-free period, and total lending is expected to reach 30 billion yuan this year.
“We need to beef up technology capabilities to track lenders’ credibility, which has shown strong resilience amid the pandemic outbreak,” Hu said.
The interest-free periods will vary according to each borrower’s situation.
Since the digital lender’s establishment five years ago, it has served some 29 million small and micro businesses, including even street stall owners. The average loan amount was 36,000 yuan. And 80 percent of borrowers had never borrowed from a bank.
The company also plans to better leverage technology and data analytics especially in rural areas to make financial services more accessible to farmers, covering 2,000 rural counties or regions.
A joint initiative proposed by MY Bank and the All-China Federation of Industry and Commerce in March was joined by more than 100 commercial banks, including major lenders as well as industry associations, and has covered 10 million micro businesses as of June.
The company’s financial services has built up a credit-rating system based on online and offline transactions and buyers’ feedback to offer collateral-free financing.
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