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FINANCE

Microlenders Choose Flight Over Fight

By Leng Cheng and Liu Xiao
Online lending services are easy to find on smartphone app stores, but their ranks might be thinned as some listed companies had already shelved their plans to expand into the business now that the government has come up with more stringent regulations for the industry. Photo: Caixin
Online lending services are easy to find on smartphone app stores, but their ranks might be thinned as some listed companies had already shelved their plans to expand into the business now that the government has come up with more stringent regulations for the industry. Photo: Caixin

As stringent rules sweep the microloan sector in China, flight is the only option for some lenders.

Even before Dec. 1, when China’s central bank and banking regulator unveiled a slew of new policies to curb the explosive growth of unsecured, small short-term loans, some listed companies had already shelved their plans to expand into microloans. After the tighter rules became official, existing lenders are weighing a shift to other businesses such as installment payment and supply-chain financing. Meanwhile, a collection agency said it has received a lot more requests to pursue debts and at higher prices, suggesting some microlenders might be wrapping up ahead of an eventual exit.

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