Banks Told to Report Data on Consumer Lending Via Ant’s Platforms

Shortly after China’s banking regulator issued new rules for online loans, the central bank started conducting a survey of commercial banks’ joint online consumer lending, indicating that regulators want to get a clear grasp of the $1 trillion market.

The People’s Bank of China sent the survey notice to commercial banks asking them to submit online consumer lending data as of December 2018, June 2019, December 2019 and the first six months of 2020, Caixin learned from banking industry insiders. Specifically, the central bank required separate data on loans through Ant Financial’s lending platforms, Huabei and Jiebei.

The central bank didn’t clarify the purpose of the survey. A person close to the central bank told Caixin it is a normal day-to-day function for the central bank to carry out research on various financial products.

The Ant reporting requirement shows regulators’ particular interest in the two giant online consumer lending platforms. With more than 100 million users, Huabei and Jiebei are two of the main lending platforms commercial banks collaborate with. Commercial banks in Beijing extended more than 40 billion yuan ($5.7 billion) of loans in collaboration with fintech companies in 2019, according to Li Mingxiao, director of the Beijing office of the China Banking and Insurance Regulatory Commission (CBIRC).

Banks are required to report the total amount, interest rate and non-performing ratio of such loans. The data should be submitted by the end of July, the notice said.

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According to the notice, online joint consumer loans refer to credit provided by financial institutions to borrowers recommended by fintech partners. This kind of lending is a business innovation for banks. Compared with the traditional offline lending model, banks can rely on fintech partners’ risk assessment-based big data and models. Automatic online processing and rapid approval can improve banks’ efficiency and expand access to broader clients. At the same time, such loans also expose banks to risks such as imprudent risk management and inadequate monitoring of the use of funds.

Total delinquent consumer loan receivables could reach 2.8 trillion yuan this year, up 14% from the end of 2019 and more than double from five years ago, according to estimates from iResearch, a Chinese market-research firm. Half the delinquent loans are credit-card debt and the rest are from nonbank lenders, the data showed.

The concerns prompted the CBIRC to issue interim measures July 17 regulating online loans of commercial banks. The rules encourage innovation on one hand but also stress strengthened supervision. But the document is just a preliminary framework and further implementation details are expected to be issued, a source from a local CBIRC bureau told Caixin.

Contact reporter Denise Jia (huijuanjia@caixin.com) and editor Bob Simison (bobsimison@caixin.com)

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