(Yicai Global) Nov. 9 -- Ant Group has started to differentiate its highly lucrative online lending business Jiebei from credit loans offered by banks on its platform, as the Chinese fintech giant overhauls its business practices after regulators asked it to make changes earlier this year.

Some users found that their accounts with Jiebei, one of Ant’s micro-loan arms, had been relabeled a ‘xinyongdai,’ or credit loans, on Nov. 7, and that the loans were now attached to certain banks. The interest rates and borrowing terms remained the same, they said.

Together with its other online lender Huabei, Jiebei’s operations will be taken over by a new subsidiary, Chongqing Ant Consumer Finance, that was set up in June. The new service will function more like a traditional bank with strong government oversight as opposed to the previous largely unregulated e-model.

The brand differentiation will help users to better understand who is providing the credit, said financial analyst Wang Pengbo. Under the previous model, money was lent by financial institutions but cloaked by the umbrella of Jiebei.

The move may disconnect Alipay from illegal connections with credit products including Huabei and Jiebei, reducing Ant's nesting credit service in the payment process of Alipay users. It can also reduce the possibility of Ant using Alipay's traffic advantage to conduct unfair competition, said Dong Ximiao, chief researcher at Merchants Union Consumer Finance.

Under the prior model, by mixing credit services offered by other lenders in its own branding, Ant was able to leverage the tremendous user base of its mobile payment platform Alipay, the country’s largest, to carry out anti-competitive practices.

Ant’s freewheeling ways will now be a thing of the past. A year ago, regulators issued a new set of rules to “bring online financial activities under full supervision" as a number of dominant platforms overstepped the mark, offering services for which they did not have the necessary licenses.

Consumer finance firms are only allowed to lend just under 10 times their capital. With registered capital of CNY8 billion (USD1.2 billion), the new entity will only be able to extend a maximum of CNY80 billion in credit.

In addition, from now on Chongqing Ant Consumer Finance must cough up at least 30 percent of the capital in each joint loan. The rest can come from banks.

Editor: Kim Taylor