Govt considers new licenses for lending firms
Print Edition
CHINA is considering introducing licenses for non-depository lending institutions amid the booming credit market, according to a draft regulation issued yesterday by the Legislative Affairs Office of the State Council.
The draft proposes that organizations or individuals not licensed by regulatory authorities should be prohibited from issuing loans.
Licensed non-depository lending institutions are not allowed to take deposits in any form, but can issue loans backed by their equity funds or money raised through bonds, the draft said.
Limited liability companies must have registered capital of at least 5 million yuan (US$783,000), while shareholding companies must have at least 10 million yuan, it said.
China’s credit market has boomed in recent years, and various non-depository lending institutions have sprung up.
However, a large number of institutions, masquerading as investment consulting firms or investment guarantee companies, are actively lending under lax supervision, leading to many cases of illegal fundraising.
In 2009, tycoon Wu Yin was sentenced to life imprisonment for cheating investors out of 380 million yuan.
The public can express their opinions about the draft via chinalaw.gov.cn until September 12.
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