An Ant Group logo is displayed at the company’s headquarters, a subsidiary of Alibaba, in Hangzhou, Zhejiang Province, China, October 29, 2020.
Aly Song | Reuters
China’s banking regulator on Saturday tightened requirements for commercial banks’ online lending business, amid intensified scrutiny of online lending by internet giants such as Ant Group, the financing arm of Alibaba Group.
Commercial banks must jointly contribute funds to issue internet loans with a partner, and the partner’s share in a loan must not be less than 30%, the China Banking and Insurance Regulatory Commission said in a notice.
The balance of internet loans issued by a bank with one partner, including its related parties, may not exceed 25% of the bank’s net captaincy.
In addition, the balance of internet loans issued jointly by commercial banks and cooperating institutions may not exceed 50% of the bank’s total balance, the guidelines state. In a separate Q&A document, the regulator stated that businesses must comply with the new rules by 17 July 2022.
The regulations increase the potential capital requirements for technology platforms such as Ant Group, which was on its way to raising $ 37 billion in an IPO based on its wide range of online lending services.
This hope was dashed when China’s regulators intervened to halt the listing in November, amid concerns that consumer debt lending could pose a threat to the country’s financial system.