China tightens supervision of online banking wealth management products
China's top banking industry regulator is increasing the supervision of potential risks in the online deposit products of banks, especially those sold on third-party platforms.
Commercial banks have been promoting their online deposit business, which helps improve the efficiency of financial services.
However, in practice, some potential risks have also been identified, said the China Banking and Insurance Regulatory Commission.
Inadequate compliance management, imprudent risk management and inadequate consumer protection are not uncommon in the cooperative sales of deposits between commercial banks and their third-party platform partners, the watchdog noted.
CBIRC said it will support commercial banks to develop online deposit businesses under the premise of prudent operations and controllable risks and require them to adhere to laws and regulations as well as strengthen risk management.
“Whether it is offline deposit or online deposit, commercial banks should strictly implement laws, regulations, savings management regulations and other relevant regulatory requirements,” the CBIRC emphasized.
The regulator said it has recently, by joining hands with the People's Bank of China, studied and drafted documents on regulating commercial banks' personal deposit business conducted through the Internet. Relevant information will be announced to the public in due course.
Strict access management of cooperative institutions is also outlined.
Commercial banks are required to establish a unified access mechanism and carefully select their third party partners.
Banks should independently implement core risk control operations including credit approval and contract signing. Such business may not be outsourced to cooperative institutions.
Recently, major platforms including Ant Group’s Alipay, Tencent’s WeChat Pay and JD Financial have all stopped selling banking wealth management products to new customers.
In July 2020, the CBIRC issued the Interim Measures for the Administration of Internet Loans of Commercial Banks, seeking to spur banks’ inclusive lending and prudent operation of Internet loan business.