New measures to rate consumer credit firms
The China Banking and Insurance Regulatory Commission issued a number of measures on Wednesday for the regulatory rating of consumer credit firms, aiming to strengthen classified supervision and promote the sector’s sustainable and healthy development.
Five elements of industry players will be taken into account — their corporate governance and internal control, capital management, risk management, professional service quality and information technology management — with the weight of each accounting for 28 percent, 12 percent, 35 percent, 15 percent and 10 percent, respectively.
In principle, the rating work should be completed before the end of April each year, the regulator noted.
The regulatory rating results will be in five grades. The larger the rating grade number, the greater risk of the institution, which requires a higher degree of regulatory attention, according to the watchdog.
The results will serve as an important guide for regulatory authorities to measure a company's operating conditions and its risk management capabilities. They will also be a reference factor for implementing market access for consumer finance companies.
Su Xiaorui, a senior researcher at the Madai Institute and an expert on the consumer credit sector, applauded the measures, saying they will help promote the healthy and sustainable development of the industry.
“The policy is not only conducive to clarifying the regulatory thinking, but is also in line with the actual situation of the industry. It will provide a perfect reference for consumer finance companies to practice compliant operations in the future,” she said.