Unified rules ease small-loan firms’ woes
Print Edition
CHINA’S financial regulators have issued a draft of relaxed and unified regulations on small-loan firms to help them access credit from banks, according to media reports.
Small-loan companies will be allowed to borrow from banks for over half of their net capital, according to the rules. Additionally an outstanding loan of a single borrower can exceed 5 percent of the lender’s net capital, 21st Century Business Herald reported yesterday, citing the draft rules co-issued by the China Banking Regulatory Commission and the People’s Bank of China.
But the relaxed rules may not automatically see the small-loan firms get capital from the banks easily, observers said.
Also, the small-loan firms can access the PBOC’s credit rating system via their local industrial associations to eradicate counterfeit central bank issued records used by potential borrowers to obtain loans illegally. The regulators plan to establish the first national body for micro-finance firms.
They also plan to allow the small-loan firms to trade bonds, stocks and other securities, and to carry out equity investment, asset securitization and bond issuance.
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