We would like to ensure that you are still receiving content that you find useful – please confirm that you would like to continue to receive ILO newsletters.
08 June 2018
On May 4 2018 the China Banking Regulatory Commission (CBRC) issued the Circular on Matters concerning Regulating Private Lending and Maintaining Economic and Financial Order (10/2018), which came into effect on the same date. Officials of the relevant government agencies also held a press conference to answer reporters' questions on the circular.
The circular was formulated in accordance with:
The circular establishes the basis for clarifying credit rules and prohibiting illegal private lending.
Violent debt collection targeted
Officials stressed that the circular is mainly directed at the increased level of violent debt collection, which affects not only private lending, but also car and housing mortgages, cash loans and campus loans in the field of internet finance.
Loan qualifications clarified
The circular declares that without government approval, no company or individual can establish an agency that:
Lenders' funds limited
A private lender's funds must be its own and come from legal income. Lenders cannot absorb other parties' funds for lending or do so in a disguised form. The circular also expresses that private lending disputes will be handled in accordance with the Provisions of the Supreme People's Court on Several Issues concerning the Application of Law in the Trial of Private Lending Cases.
Illegal loan lending activities specified
Under the circular, the following activities constitute illegal loan lending activities:
According to the government officials at the press conference, the circular will be implemented in three stages.
First, lending institutions and funding agencies – including banking financial institutions and microfinance companies approved by the government – must:
Further, local governments and relevant departments must strengthen coordination and perform duties according to the law.
Lastly, the officials stressed that banking supervision institutions must promptly:
For further information on this topic please contact Wu Jiejiang at Jingtian & Gongcheng by telephone (+86 10 5809 1000) or email (firstname.lastname@example.org). The Jingtian & Gongcheng website can be accessed at www.jingtian.com.
The materials contained on this website are for general information purposes only and are subject to the disclaimer.
ILO is a premium online legal update service for major companies and law firms worldwide. In-house corporate counsel and other users of legal services, as well as law firm partners, qualify for a free subscription.