China’s Private Banks May Not Be Allowed to Work With Unlicensed Lenders to Make Loans
China is considering forbidding privately owned banks from joining with unlicensed lenders to create larger loan pools — the central government’s latest effort to pre-empt credit risks outside the mainstream banking system.
Privately owned banks, which are usually small, often struggle with limited access to the funding they need to make loans. Over the past several years, these banks usually teamed up with other financial institutions, some of which were unlicensed lenders, to create a large enough pool of loans. For instance, Weilidai, a key product of WeBank, teamed up with 25 banks to fund about 80% of its loan portfolio.
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