The Banking and Insurance Regulatory Commission recently pointed out in response to the comments of netizens that in view of the problems existing in the online small loan business of some small loan companies, the local financial regulatory departments have been organized to carry out special rectification and cleaning up norms, and comprehensively halt the establishment of new online small loan practitioners. In addition to strengthening the supervision of online loan companies, including online small loans, the CBRC also explicitly mentioned in its reply to comprehensively suspend the establishment of new online small loan practitioners, and will continue to improve the relevant regulatory system to promote the standardized operation of the online small loan industry. In the view of analysts, this move is a further clarification of the current supervision of online small loans, aimed at controlling the risks of online small loans from the source.

In fact, as early as November 2017, the Office of the Leading Group of the Internet Financial Risk Rectification Work also issued a Notice on Immediately Suspending the approval of online small loan companies. Since then, the number of new network small loan licenses on the market is few. The reporter further found that according to the sky Eye data, since 2020, only a few network small loan licenses such as Fuzhou Sina network small loan, Shandong Guosheng small loan, Shenzhen small win small loan, Shandong Rongyue Network small loan came out. Among them, the first three institutions are closely related to P2P transformation, and the last largest shareholder is Shandong SASAC.

We will effectively protect the legitimate rights and interests of financial consumers

The CBRC said that the CBRC attaches great importance to regulating the development of commercial banks' Internet loan business, and has issued the Interim Measures for the Management of Internet Loans of Commercial Banks, the Notice on Further regulating the Internet Loan Business of Commercial Banks, and the Notice on Strengthening the Management of Internet loan Business of Commercial Banks and Improving the Quality and Efficiency of Financial Services. Clarify the principle of small and short-term Internet loans, set limits on consumer personal credit loans, prevent the risk of rapid rise in the personal leverage ratio of residents, and put forward regulatory requirements in the use of funds, loan payments, risk data and models, and protection of consumer rights and interests. At the same time, from the bank side to consolidate the management responsibilities of cooperative institutions, commercial banks are required to strictly manage the access of cooperative institutions, clarify the content of cooperation agreements, strengthen the disclosure of cooperative product information, fulfill the main responsibility of loan management, and effectively protect the legitimate rights and interests of financial consumers.

The Banking and Insurance Regulatory Commission clearly pointed out that in view of the problems existing in the online small loan business of some small loan companies, the local financial regulatory departments were organized to carry out special rectification and cleaning up norms, and comprehensively halted the establishment of new online small loan practitioners. Small loan companies are required to reasonably determine the loan amount and term according to the borrower's income level, overall liabilities, asset status, actual demand and other factors, so that the borrower's repayment does not exceed its repayment ability, and prevents the borrower from excessive debt.

At the same time, the banking and Insurance Regulatory Commission also said that the focus of the rectification of campus loans and other areas of chaos, together with the Ministry of Education, the Central Network Information Office and other departments to strengthen the rectification and standardized management of campus loans, college students Internet consumer loans issued a series of documents, clearly stipulates that institutions without regulatory approval shall not provide credit services for students in school; Licensed financial institutions shall substantially review and identify the identity of students and the real purpose of the loan when issuing Internet consumer loans to school students.

The supervision of online small loan companies has become stricter

Since 2020, relevant documents for online small loan companies have been frequently introduced, and supervision has become significantly stricter. The Decision of the Supreme People's Court on Amending the Provisions on Several Issues Concerning the Application of Law in the Trial of Private Lending Cases, which took effect on August 20, 2020, clearly states that where a lender requests a borrower to pay interest at the interest rate agreed upon in the contract, The standard is 4 times the one-year loan market quotation rate (LPR) issued monthly by the National Interbank Lending Center authorized by the People's Bank of China since August 20, 2019, which is significantly lower than the previous lending rate benchmark.

In September 2020, the China Banking and Insurance Regulatory Commission issued the Notice on Strengthening the Supervision and Management of Small Loan Companies, restricting the external financing of small loan companies, loan purposes, service areas, interest rates and other aspects. In November 2020, the China Banking and Insurance Regulatory Commission and the People's Bank of China publicly solicited comments on the Interim Measures for the Management of Online Small Loan Business (Draft for Comment), which clarified the access mechanism for online small loan business, especially the registered capital of small loan companies operating online small loan business is not less than 1 billion yuan, and it is a one-time paid-in monetary capital. The business scope, external financing, loan amount and loan use of small loan companies operating online small loan business are further clarified.

Source: Investment Letter