The China Banking and Insurance Regulatory Commission (CBIRC) and the People’s Bank of China (PBOC) announced on November 2, 2020 the Interim Measures for the Administration of Online Micro-lending Business (Draft for Solicitation of Comments) (网络小额贷款业务管理暂行办法(征求意见稿)). The measures aim to prevent risks in the online microlending business.

The measures are mainly aimed at micro-lending businesses run by the emerging internet giants in China.

The measures require.

(1) Online micro-lending enterprises (“enterprises”) that use big data, cloud computing, mobile internet and other technological means to analyze and assess the credit risk of debtors, determine loan models and amounts, and complete loan-related processes online shall be subject to their supervision. (Article 2)

(2) Despite the fact that an enterprise provides online services, it still may not operate across geographic boundaries. (Article 2)

(3) The balance of funds of an enterprise may not exceed one times its net worth if the funds come from non-standardized financing, or four times its net worth if the funds come from standardized debt assets. (Article 12)

(4) The balance of an enterprise’s loan to a natural person shall not exceed RMB 300,000, nor shall it exceed one-third of its average annual revenue for the last three years. (Article 13)