An Ant Group logo is displayed at the company’s Alibaba affiliate headquarters in Hangzhou, Zhejiang Province, China, October 29, 2020.
Aly Song | Reuters
The Bank of China’s regulator on Saturday tightened requirements for online lending by commercial banks amid increased control of online lending by Internet giants such as Ant Group, the financial arm of Alibaba Group.
Commercial banks must jointly contribute funds to issue loans online with a partner, and the proportion of capital in the partner of a loan should not be less than 30%, China Banking and Insurance Regulatory Commission said in a statement.
The balance of online loans issued by a bank with a partner, including its affiliates, must not exceed 25% of the bank’s net tier 1 capital, he said.
In addition, the balance of Internet loans issued jointly by commercial banks and cooperating institutions may not exceed 50% of the total balance of the bank, the guidelines show. In a separate question and answer document, the regulator said companies must comply with the new rules by July 17, 2022.
The regulations will increase potential capital requirements for technology platforms, such as Ant Group, which was about to raise $ 37 billion in an IPO based on its wide range of online lending services.
These hopes were dashed when Chinese regulators stepped in to stop listing in November, out of concern that excessive consumer debt lending would pose a threat to the country’s financial system.