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Move aimed at curbing risks, serving real economy Regulation of all finance businesses will be integrated, an official with the People's Bank of China (PBOC), the country's central bank, said on Saturday commenting on the rapid growth of cash loan businesses. Experts said the new regulation system aims to reduce risks and serve the real economy by allowing more innovative capability. It is obvious cash loans are expanding rapidly, Ji Zhihong, head of the financial market department of China's central bank, was quoted as saying in a report by financial news site cnstock.com on Saturday. Ji said that all financial operations are subject to regulation. The PBOC has been collaborating with relevant departments to conduct a special rectification program targeting Internet finance risks, Ji said. Progress has already been made and the level of financial risk has been curbed, said the report. The regulation system used to be more vertical, which inevitably leaves some loopholes for Internet companies, Liu Xuezhi, a senior analyst at Bank of Communications, told the Global Times on Sunday. "Some Internet firms label themselves as being engaged with technology business, but in reality they specialize in finance," he explained. The business scale of cash loans may not be big, but the potential risk is significant given the large user base of Internet finance, Shao Yu, chief economist at Shanghai-based Orient Securities, told the Global Times. "The supervision should focus on the source of assets and fund-raising companies, so that a full assessment system for risks can be established," he said. Online micro-credit firms are innovative in serving users who are in need of loans, and this is partly because they might not meet the credit requirements for the banking system, Liu pointed out. The new regulation system will require cooperation between banks and Internet companies, and the complementary information will better serve clients, he said. "It would be great to create an integrated credit system for loan approval. All credit agencies would benefit from an integrated system that provides unified statistics with loan records, credit assessment and blacklists. Among banks, communication about transactions can be beneficial to all lending institutions," Jin Baisong, an independent economist, told the Global Times. "The PBOC will identify the loopholes and establish the bottom line for online micro-credit firms," Shao said. At the same time, "the rules need to find a balance between supervision and space for financial business innovation," he noted. "More guidance will be provided by the PBOC to better serve the real economy. This is reflected in Ji's remarks," said Liu. |
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