People film the new sign of the China Banking and Insurance Regulatory Commission (CBIRC), the newly merged regulator, at their office in Beijing, China, April 8, 2018. Reuters/Stringer
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SHANGHAI, July 8 (Reuters) – China late Thursday unveiled tougher rules to better regulate its $1.3 trillion credit card industry, urging lenders to adopt a “prudent” growth strategy and monitor risks more closely. prompted to do
According to rules jointly released by the People’s Bank of China and the country’s banking regulator, banks are prohibited from using the number of cards issued or market share as key performance metrics, and are 20% idle overall. The number of cards must be limited. ,
“China’s credit card business is growing rapidly and plays an important role in facilitating payments and consumption,” the China Banking and Insurance Regulatory Commission (CBIRC) said in a statement on its website enacting the new regulations. “
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“Recently, however, some banks … have been lax in risk management and behaved in ways that have harmed customers’ interests,” the regulator said.
Chinese banks have issued a total of 800 million credit cards with 8.62 trillion yuan ($1.29 trillion) in outstanding credit by the end of 2021, according to the People’s Bank of China. That’s about 86 billion yuan in credit card debt, or 1% of the total outstanding, overdue for six months or more.
The new rules require banks to tighten controls on credit card loans and strengthen risk management controls.
Banks should also put in place a robust system to monitor, detect, alert and prevent fraud in the credit card business according to the regulations.
($1 = 6.7005 Chinese Renminbi Yuan)
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Reporting by Samuel Shane and Brenda Goh Editing by Mr. Navratnam
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