Chinese regulator finalizes guidelines for banks’ internet lending activities

The Chinese banking regulator on Saturday tightened requirements for commercial banks’ internet lending activities, amid heightened oversight of online lending by internet giants such as Ant Group, the financial arm of Alibaba Group.

Commercial banks must jointly contribute funds to issue Internet loans with a partner, and the partner’s equity share in a loan should not be less than 30%, the China Banking and Insurance Regulatory Commission said in a statement. notice.

The balance of internet loans issued by a bank with a partner, including its related parties, should not exceed 25% of the bank’s level one net equity, he said.

In addition, the balance of Internet loans issued jointly by commercial banks and cooperative institutions cannot exceed 50% of the total bank balance, according to the guidelines. In a separate question-and-answer document, the regulator said businesses must comply with the new rules by July 17, 2022.

The regulation will increase the potential capital needs for technology platforms such as Ant Group, which was on track to raise $ 37 billion in an IPO based on its wide range of online lending services.

Those hopes were dashed when Chinese regulators intervened to halt listing in November over concerns that excessive consumer debt lending posed a threat to the country’s financial system.