China: Internet loan business, criticizing their inadequate risk control management

n order to further regulate the operation of commercial banks' Internet loan business and promote the stable and healthy development of Internet loan business, the China Banking and Insurance Regulatory Commission recently issued the "Notice on Strengthening the Management of Commercial Banks' Internet Loan Business to Improve the Quality and Efficiency of Financial Services" (hereinafter referred to as the "Notice").

The "Notice" aims at problems such as inadequate risk, and further details in terms of fulfilling the main responsibilities of loan management, strengthening information and data management, improving loan fund management, standardizing cooperative business management, and strengthening consumer rights protection. It clarifies the requirements for commercial bank loan management and independent risk control.

In terms of transition period arrangements, considering factors such as commercial banks' rectification level, business continuity, and connection with credit investigation regulations, the transition period set up in the Notice is consistent with the Administrative Measures for Credit Investigation Services, that is, from the date of promulgation to 2023 On June 30, 2009, the transition period of the Interim Measures for the Administration of Internet Loans of Commercial Banks was also extended to ensure that the Internet loan business will not reduce the support for the real economy.

The China Banking and Insurance Regulatory Commission stated that the issuance and implementation of the "Notice" are conducive to further improving the Internet loan supervision system of commercial banks, standardizing business cooperation behavior, and promoting the standardized and healthy development of the platform economy. In the next step, the China Banking and Insurance Regulatory Commission will strengthen supervision, guidance, and implementation, promote commercial banks to carry out Internet loan business in accordance with the law and prudently, effectively improve the level of operation and management, and continue to improve the quality and efficiency of financial services for the real economy.

The China Banking and Insurance Regulatory Commission said that it attaches great importance to the stable and healthy development of the Internet loan business of commercial banks. After the "Interim Measures for the Administration of Internet Loans of Commercial Banks" (hereinafter referred to as the "Measures") and the "Notice of the General Office of the China Banking and Insurance Regulatory Commission on Further Regulating the Internet Loan Business of Commercial Banks" (hereinafter referred to as the "Internet Loan Notice"), commercial banks are safe and sound The rectification of the Internet loan business was promoted, business processes were gradually optimized, and risk control capabilities were enhanced; at the same time, under the supervision of regulatory authorities, the cooperative loan business involving platform companies was also orderly and standardized. However, commercial banks still have problems such as insufficient fulfillment of the main responsibilities of the loan, and excessive reliance on cooperative institutions in core risk control links such as credit approval, loan issuance, and fund monitoring.

In accordance with the central government's decision and deployment on promoting the standardized and healthy development of the platform economy and strengthening the supervision of Internet loan business, in order to improve the implementation effect of the "Measures", the China Banking and Insurance Regulatory Commission has formulated the "Notice" on the basis of listening to the opinions of all parties and in-depth research and demonstration. The requirements for commercial banks' loan management and independent risk control shall be clarified, and commercial banks and cooperative institutions shall be promoted to conduct business cooperation in a standardized manner, so as to promote the high-quality development of Internet loan business.

According to statistics, as of the end of 2021, the Internet loan balance of banking financial institutions was 5.75 trillion yuan, a year-on-year increase of 21.8%. Among them, personal Internet loans for production and operation and corporate working capital Internet loans increased by 68.1% and 46.3% respectively year-on-year.

The "Notice" continues the consistent regulatory principles of the "Measures" and the "Internet Loan Notice", coordinating development and security, and puts forward the following requirements for commercial banks:

  • The first is to fulfill the main responsibility of loan management, improve the risk management and control capabilities of Internet loans, and prevent the "hollowing out" of loan management.

  • The second is to obtain complete and accurate information and data required for identity verification, pre-loan investigation, risk assessment and post-loan management, and take effective measures to verify its authenticity.

  • The third is to actively strengthen the management of loan funds, effectively monitor the use of funds, ensure the safety of loan funds, and prevent the interception and misappropriation of cooperative institutions.

  • The fourth is to sign a cooperation agreement by category and clarify the rights and responsibilities of all parties, and shall not mix other service agreements in the loan and capital contribution agreement. Restrict or refuse to cooperate with cooperative institutions that have violated regulations.

Fifth, effectively protect the legitimate rights and interests of consumers, fully disclose all kinds of information, and strictly prohibit improper collection and other behaviors. In addition, the compliance management of the marketing and publicity behaviors of cooperative institutions should also be strengthened.

In order to promote commercial banks to strengthen the management of loan funds, and to have a complete and clear grasp of the flow of funds and information, the "Notice" requires the bank to make decisions on key links such as loan fund issuance, principal and interest recovery and withholding, and stop payment, and that instructions should be initiated by the bank. If self-payment is adopted, the commercial bank shall directly release the funds to the bank account of the borrower's own bank or another bank. For the joint financing of loans, one of the banks can be responsible for the specific operations.

At the same time, considering the actual situation that the entrusted payment is mainly for the majority of merchants, in order not to affect the consumer experience and the business activities of the merchants, there are no restrictions on the loan issuance channels, and commercial banks can choose the bank account system or non-bank payment account system to issue loans according to the actual situation. , but should perform the entrusted payment responsibility, and finally pay the loan funds to the transaction object that meets the purpose of the borrower's contract.

The "Notice" sets a transition period in accordance with the principle of "breaking the old and the new", which is consistent with the "Administrative Measures for Credit Information Business", that is, from the date of issuance to June 30, 2023; the "Measures" transition period is also included The extension will be extended to June 30, 2023, to ensure that the Internet loan business will continue to support the real economy.

During the transition period, the existing business that does not meet the regulatory requirements shall be gradually reduced in an orderly manner on the basis of controlling the overall scale; during the transition period, the new business that exceeds the existing scale shall comply with the Measures, the Internet Loan Notice, and the "Internet Loan Notice". notice requirements.

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