CBRC, Ministry of Education and the Ministry of Human Resources and Social Security Jointly Issued the Notice on Further Strengthening the Regulation and Management of Campus Credit

 

The rapid development of internet finance, the advanced consumption concepts among college students as well as the convenient application of internet loans have expedited the development of online lending. However, the illegal activities in online lending industry, such as the usury and debt collection through violence, have seriously infringed the lawful rights and interests of college students.

 

In order to mitigate potential risks and combat illegal activities at the source, China Banking Regulatory Commission (CBRC), the Ministry of Education and the Ministry of Human Resources and Social Security have recently issued the Notice on Further Strengthening the Regulation and Management of Campus Credit (hereinafter referred to as the “Notice”).Through the implementation of the Notice, supervision and management of online lending to university students shall be enhanced.

 

The Notice aims to improve existing service channels, promote financial products innovation, intensify risk prevention and reinforce governance. At the early stage, it is essential to further optimize the top-level design and rectify regulatory loopholes based on the existing measures conducted by the Ministry of Education, the Ministry of Industry and Information Technology, the Ministry of Public Security, the State Administration for Industry and Commerce and other related authorities.

 

First, offering suitable financial products and related services. Commercial banks and policy banks are encouraged to design financial products which cater for college students’ demands, improve service efficiency, and make the financial services fully cover college students’ needs. In addition, being authorized and supervised by banking regulatory authorities, commercial banks are expected to design campus financial products which could not only meet the financing demands of students, but also could effectively control the risks.

 

Second, enhancing governance and mitigating risks. Online lending institutions which issued loans to college students are prohibited from issuing new loans and should have clear rectification plans in place. Meanwhile, institutions which are not approved by banking regulatory authorites should be banned from offering credit services to college students. Thus, authorities should join hands to combat potential misconducts with collective efforts.

 

Third, correcting misconceptions and strengthen education. When improving the campus credit market, proper guidance for students cannot be neglected. Universities ought to introduce a wide range of educational activities to encourage rational consumption among students. Despite of this, stringent punishment should be implemented so as to maintain order and stability of campus.

 

Next, based on the Notice, the CBRC will encourage commercial banks to explore and adopt sustainable business model concerning campus loans. By promoting the development of standard financial services, commercial banks shall share the responsibility to help prevent misconducts of online lending to college students.

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