Online P2P Lenders Ordered to Bring Creditors' Records to National Credit System

Regulators in Beijing call for credit reporting, working jointly with the central bank and credit reporting agencies.

Belinda Zhou
    Sep 06, 2019 6:25 PM  PT
Online P2P Lenders Ordered to Bring Creditors' Records to National Credit System
author: Belinda Zhou   

China's regulators have imposed a new rule this week for peer-to-peer lenders to share all borrowers' credit history with state-run credit reference centers.

The no­tice, posted earlier this week, called for all P2P lending institutions to report operations data to the credit reference agencies controlled by the Peo­ple's Bank of China, according to the official statement. 

Credit reporting agencies in China have databases run by the Credit Ref­er­ence Cen­ter of the Peo­ple's Bank of China and Baihang Credit, China's only licensed and market-oriented personal credit agencies. 

A Baihang representative told Xinhua News that the company covers almost 63,000,000 creditors and lenders with major institutional players in the online lending industry. Baihang has been backed by China's largest companies including the financial arm of Alibaba Group Holding Ltd. (NYSE: BABA), Tencent Holdings Ltd. (HKEX: 0700), financial giant Ping An Insurance and other companies. 

In the past, with an uploaded credit report, online lending institutions could check a borrower's loan history with banks, but could not check a borrower's credit history on other online lending platforms. In turn, commercial banks were blocked from the borrowing records of P2P lenders. As a result, borrowers used money from an online platform to repay old debts on another lending platform. 

Under the new guidance, once a P2P borrower defaults, he or she will face higher-than-average loan interest rates for the credit premium, as well as limits on loan and insurance services.

The notice is titled "No­tice Con­cern­ing Strength­en­ing P2P On­line Lend­ing Sec­tor Credit Sys­tem Es­tab­lish­ment."

The regulations were tightened by expanding the reporting base from defaulted borrowers to all the creditors and borrowers. Xinhua News reported that, in the past, only the defaulters' information has been recorded in the system under the regulation of the central bank and China Banking Regulatory Commission. 

According to data released by, the loan balance in the country's P2P online lending industry dropped to 642.9 billion yuan ($91.9 billion) as of August, an additional 4 percent decline from July. Just this month, 15 platforms across China have been shut down. Of those, six were in Beijing and five were in Shanghai, according to public data. The firms were shut down for reasons including vanishing owners, fraud and capital chain issues.

Last year, Beijing has implemented a policy of three downs, seeking to diminish the number of lending institutions, the volume of loans and number of borrowers in China.

"A mother-in-law in China will take the credit report into consideration when she evaluates a husband for her daughter," Yulu Chen, deputy governor of the PBoC, said in a public statement in March. 

"Online financing institutions will be incorporated into the credit system," he added.