(Yicai) Aug. 26 -- China's financial regulator is considering imposing a ceiling for the first time on the amount of money online micro lenders can lend out to a single borrower, and to also bar the hiring out of licenses, as the country cracks down on the small loan sector.

Online micro lenders may only lend out CNY200,000 (USD28,089) to any single borrower, according to a document released by the National Financial Regulatory Administration a few days ago soliciting opinions from the public. This is the first time that a borrowing limit has been placed on a single borrower.

The balance of loans offered to the same borrower by micro lenders should not exceed 10 percent of this borrower’s net assets and the amount offered to the same borrower and associated parties should not surpass 15 percent of this borrower’s net assets, said the document, which is the latest update on ‘Interim Measures for the Supervision and Administration of Small-Loan firms’ since they were first introduced in 2020.

The per-borrower ceiling of business loans from online small-loan firms should be CNY10 million (USD1.4 million), the document said.

Small-loan companies should not hire out or lend their licenses, nor should they provide channels for entities without the proper qualifications to issue loans, the regulator said. And they should not enable businesses to dodge regulations that exist in areas where they operate but not in the places where they are registered.

The small loan sector has been operating stably in recent years. There were 6,500 small-loan firms in China as of the end of last year, which had extended CNY843.1 billion (USD118.4 billion) in loans and actually received funds of CNY822.6 billion. Of these, 179 were online small-loan companies which had a loan balance of CNY173.9 billion (USD24.4 billion) and actual received funds of CNY159 billion.

China banned the opening of new online small-loan firms in 2017. The number of micro e-lenders dropped to 179 as of the end of last year from 224 in 2018.

Editor: Kim Taylor