China Bans Unlicensed Micro-Loans, Caps Rates to Limit Risks
- Regulators to review licenses of non-compliant micro-lenders
- Micro-lenders banned from lending to borrowers without income
The People's Republic of China flag flies in front of PPDAI Group Inc. signage displayed outside of the New York Stock Exchange (NYSE) in New York.
Photographer: Michael Nagle/BloombergChinese authorities banned unlicensed lending and capped borrowing costs in its latest efforts to crack down on the country’s online micro-lenders as financial regulators zero in on risk in the soaring market for consumer credit.
The total interest rates plus fees charged on borrowing can’t exceed the ceiling imposed by the Supreme People’s Court, and lenders are barred from giving loans to those without income, China Business News reported, citing an official notice. Regulators will also stop approving new micro-lenders, and non-compliant creditors that have already been approved will be subject to a review.