China issued stricter guidelines late Thursday to better control its $1.3 trillion credit card sector, asking lenders to pursue a "prudent" expansion strategy and continuously monitor risks.
According to rules jointly published by China's central bank and the country's banking regulator, banks are also prohibited from using the number of cards issued or market share as primary performance indicators, and are expected to cap the number of dormant cards at 20 per cent of total.
"China's credit card business has been growing rapidly, playing a key role in facilitating payment and consumption," the China Banking and Insurance Regulatory Commission (CBIRC) said in a statement on its website accompanying the release of the new rules.
"Recently, however, some banks ... are lax in risk management, and have behaved in ways that hurt customers' interest," the regulator said.
According to the People's Bank of China, Chinese banks issued 800 million credit cards as of the end of 2021, with outstanding loans totaling 8.62 trillion yuan ($1.29 trillion). Credit card loans of 86 billion yuan, or 1% of total outstanding, are six months or older.
The new guidelines urge banks to tighten credit card loan scrutiny and boost risk management controls.
According to the laws, banks must also build up a sound system to monitor, identify, notify, and prevent abuse in the credit card business.
(Source:www.usnews.com)
According to rules jointly published by China's central bank and the country's banking regulator, banks are also prohibited from using the number of cards issued or market share as primary performance indicators, and are expected to cap the number of dormant cards at 20 per cent of total.
"China's credit card business has been growing rapidly, playing a key role in facilitating payment and consumption," the China Banking and Insurance Regulatory Commission (CBIRC) said in a statement on its website accompanying the release of the new rules.
"Recently, however, some banks ... are lax in risk management, and have behaved in ways that hurt customers' interest," the regulator said.
According to the People's Bank of China, Chinese banks issued 800 million credit cards as of the end of 2021, with outstanding loans totaling 8.62 trillion yuan ($1.29 trillion). Credit card loans of 86 billion yuan, or 1% of total outstanding, are six months or older.
The new guidelines urge banks to tighten credit card loan scrutiny and boost risk management controls.
According to the laws, banks must also build up a sound system to monitor, identify, notify, and prevent abuse in the credit card business.
(Source:www.usnews.com)