China’s banking regulator has formally unveiled rules that will force Ant Group Co. and other online lenders to have more skin in the game when lending to banks, dealing a blow to a brutal business that has helped steer Chinese consumer spending in recent years.
Starting in 2022, internet lending platforms in the country must finance at least 30% of all loans they provide with commercial lenders, which include banks, securities firms, and finance companies. Individual banks will also be subject to new allowances on the extent to which they can lend with online partners, according to rules published Saturday by China’s Banking and Insurance Regulatory Commission.
Several analysts said Monday that the rules are aimed at major technology companies including Ant and WeBank, a major online lender backed by Tencent Holdings Ltd. most of the money. Ant and WeBank declined to comment.
Ant, in particular, has been under intense regulatory scrutiny since the first major public tenders were withdrawn in early November last year. The owner of Alipay, which has more than a billion users in China, has partnered with about 100 commercial lenders, including many small regional banks and trust companies, to lend to hundreds of millions of people, accumulating huge profits in the process.
At the end of June 2020, Ant had the equivalent of $ 267 billion in unpaid consumer loans, making up nearly a fifth of the country’s short-term household debt. Only 2% of that total was funded by the company with Hangzhou headquarters. Their consumer loan services, Huabei and Jiebei, have given credit to many young people in China who do not qualify for credit cards issued by banks.