Regulators Hone In on Loan Assistance Revenue Sharing (AI Translation)
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文｜财新周刊 刘冉
By Liu Ran, Caixin Weekly
文｜财新周刊 刘冉
By Caixin Weekly's Liu Ran
过去十余年支撑银行消费贷快速增长的重要模式——助贷，或将迎来监管新规。在此前多次强调银行自主授信、自主风控的基础上，此次新规拟剑指助贷业务的要害——收入分润。
The important model that has fueled the rapid growth of bank consumer loans over the past decade—loan facilitation—may face new regulatory measures. Building on previous multiple emphases on banks' independent credit approval and independent risk control, this new regulation aims to target the core of the loan facilitation business—revenue sharing.
财新从业内人士处获悉，近日，国家金融监督管理总局（下称“金监总局”）草拟了《关于加强商业银行互联网助贷业务管理的通知》（下称“新规”），向部分商业银行和地方金融监管局征求意见；北京、上海、深圳等地金融管理局，浦发银行、浙商银行等股份制银行均已收到该征求意见稿。
Caixin has learned from industry insiders that the National Financial Regulatory Administration (referred to as the "Financial Regulatory Administration") recently drafted the "Notice on Strengthening the Management of Commercial Banks' Internet Lending Business" (referred to as the "New Regulations") and has solicited opinions from some commercial banks and local financial regulatory bureaus. Financial regulatory bureaus in Beijing, Shanghai, Shenzhen, and other locations, as well as joint-stock banks like Shanghai Pudong Development Bank and China Zheshang Bank, have all received the drafted consultation document.
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- New regulations in China are targeting the loan facilitation business model, focusing on revenue sharing between banks and loan platforms.
- The draft proposes a cap of 30% on intermediary service fees and mandates that guarantee fees should not exceed loan interest rates.
- Current debates concern the impact on small platforms and banks' abilities to independently manage risk and compliance.
The rapid growth of bank consumer loans over the past decade, driven by loan facilitation, may face new regulatory measures aimed at revenue sharing [para. 1]. The National Financial Regulatory Administration has drafted the "Notice on Strengthening the Management of Commercial Banks' Internet Lending Business" and solicited opinions from commercial banks and local financial regulatory bureaus [para. 3].
Internet-assisted lending, as defined in the new draft, involves third-party institutions using internet and mobile communication technologies to guide or recommend borrowers to banks [para. 4]. Loan facilitation in China dates back to 2008, but saw significant proliferation after 2013 with the rise of internet finance [para. 5]. As of July 2024, the balance of household loans stood at 81.35 trillion yuan, with personal short-term consumer loans comprising a significant portion [para. 6]. Internet-assisted loans account for around 40% of narrow consumer loans, signifying the importance of loan facilitation platforms [para. 7].
Previous regulatory measures largely targeted interest rates, fees, customer acquisition, risk control, and debt collection [para. 10]. The new regulations emphasize that intermediary loan service fees should be paid to loan institutions after loan settlement, capped at 30% of the actual interest received [para. 12]. Additionally, they stipulate that guarantee enhancement fees should not exceed loan interest rates, mitigating unreasonable charges [para. 13]. Industry responses are mixed; some view the regulations positively for standardizing fee structures, while others worry about impacts on business operations, especially those with higher interest rates [para. 16].
The new regulations cap revenue sharing ratios at 30%, aiming to reduce the disparity between banks' costs and the high shares taken by loan facilitation platforms [para. 23]. However, views vary, as some internet platforms already operate within this cap and foresee little impact [para. 26]. The new regulations also focus on guarantee companies, standardizing their fees to prevent excessive charges, which have historically driven up loan costs [para. 32][para. 35]. Guarantee companies often act as channels for higher rates, revealing a need for tighter supervision [para. 38].
Regulatory authorities emphasize banks should enhance their independent risk control capabilities and not depend solely on loan facilitation platforms [para. 40]. Previous regulations like the "Interim Measures for the Administration of Internet Loans by Commercial Banks" already mandated rigorous control but have faced implementation challenges [para. 43][para. 49]. The Financial Regulatory Administration continues to push for strengthened responsibilities and capabilities among banks to prevent a "hollowing out" of loan management [para. 50].
The new regulations include measures to encourage banks to develop robust technological infrastructures for secure and efficient internet lending [para. 53]. However, the practicality of these measures may be challenging for small and medium-sized banks relying heavily on outsourced IT solutions [para. 54]. There's concern that platforms imposing high loan approval rates on banks could compromise risk controls, an issue addressed by the new regulations [para. 56]. The effectiveness of these regulatory interventions in practice remains to be seen [para. 57][para. 58].
- Shanghai Pudong Development Bank
浦发银行 - Shanghai Pudong Development Bank (SPD Bank) has received a draft of the new regulations on internet lending and assisted loan services from the National Financial Supervisory Administration. The new regulations aim to address income distribution in assisted lending, requiring banks to pay service fees only after loan settlement and to limit the fee proportion to 30% or less.
- Zheshang Bank
浙商银行 - Zheshang Bank, one of the banks that received the draft of the new regulation on the management of internet lending business by commercial banks, is mentioned among other banks such as Shanghai Pudong Development Bank. This proposed regulation, aimed at addressing income sharing in the lending partnership with third-party institutions, could impact their existing business models and fee structures.
- Shenzhen Zhong An Credit Investment Co., Ltd.
深圳市中安信业创业投资有限公司 - Shenzhen Zhong An Credit Investment Co., Ltd., in partnership with the Shenzhen branches of the China Development Bank and China Construction Bank, pioneered microloan services starting in 2008. This collaboration marked the beginning of China's assistive lending (助贷) industry, which has since evolved significantly, especially with the rise of internet financial services post-2013.
- China Development Bank
国家开发银行 - China Development Bank (CDB) is a policy bank in China that provides financing for large-scale infrastructure projects, economic development initiatives, and other national strategic objectives. It was one of the early collaborators in China's microloan market, notably through a partnership in 2008 with Shenzhen Zhong An Credit and other banks. CDB's involvement often signifies state-backed credit support in various sectors.
- China Construction Bank
中国建设银行 - China Construction Bank (CCB) is one of the major banks involved in micro-loan business since 2008. It partnered with Shenzhen Zhong An Credit and the Shenzhen branch of China Development Bank to venture into the micro-finance sector. CCB's collaboration with these entities marked the beginning of China’s assistive loan business history.
- JD Technology
京东科技 - A representative from JD Technology commented that regulatory authorities prefer a pure traffic referral model over the current interest and fee-sharing model. They noted that during a past rectification, JD Technology ceased collaborating with smaller banks due to their insufficient independent risk control and credit approval capabilities, leading to disruptions in customer loan services. JD Technology's own risk control capabilities are now mainly applied to its self-operated branded business.
- Jincheng Bank
金城银行 - Jincheng Bank collaborates frequently with Douyin. The cost for acquiring a new loan customer through this partnership ranges between 700 to 1500 yuan, a significant increase from the 70 to 150 yuan range during the peak of P2P platforms between 2016 and 2018. The bank notes that internet companies with control over traffic are now significantly profitable.
- Douyin
抖音 - Douyin collaborates with banks like Jinzhong Bank for loan-related services. Jinzhong Bank's cost per new loan customer ranges from 700 to 1500 RMB, reflecting high acquisition costs compared to past P2P platforms. Regulatory scrutiny focuses on internet loan practices, affecting partnerships with platforms like Douyin.
- 2008：
- Shenzhen Zhong'an Xin Ye Venture Capital Co., Ltd. collaborated with the Shenzhen branch of the China Development Bank and the Shenzhen branch of China Construction Bank on microloan businesses.
- 2010：
- The balance of personal short-term consumer loans was 679.795 billion yuan at the beginning of the year.
- After 2013：
- The loan facilitation business proliferated with the rise of internet finance.
- End of 2019：
- The balance of personal short-term consumer loans rose to 9.9 trillion yuan.
- 2020：
- Supreme People's Court of China revised the maximum judicial protection interest rate to four times the LPR for a one-year period.
- August 2020：
- The maximum judicial protection interest rate was revised to four times the LPR by the Supreme People's Court of China for a one-year period.
- End of July 2024：
- The balance of household loans stood at 81.35 trillion yuan.
- End of July 2024：
- The balance of short-term consumer loans stood at 9.9 trillion yuan.
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