(Yicai Global) Oct. 27 -- The cash loan business is becoming the target of strict supervision.
On April 10, the China Banking Regulatory Commission (CBRC) formally issued its Guidelines on Banking Risk Prevention and Control Work that clearly expresses its intention to ram through the internet loan Platform (P2P) risk special rectification initiative.
The guidelines direct the focus onto cleaning up and sorting out internet student loans and prohibits these to university students under age 18. They bar online loan information intermediaries from targeting in their marketing borrowers with proven repayment ability. They also ban false advertising and illegal sales and usury committed under the guise of legitimacy.
Cash loans originated from the payday loans common abroad (short-term personal pure credit loans repayable within 30 days). Interest on cash loans has long far exceeded the legal limit (annual interest of 36 percent), though, and is still going up. Many famed internet firms ply this business over and above banks: the Jiebei of Ant Financial, online payment arm of Alibaba Group Holding Ltd. [NYSE:BABA], Weilidai of the WeChat messaging app of Tencent Holdings Ltd. [HK:0700], dai.163.com under NetEase Inc. [NASDAQ:NTES] and the Wanda Loan of Dalian Wanda Group Co.