An Ant Group logo appears at the company’s headquarters, Alibaba’s subsidiary, in Hangzhou, Zhejiang Province, China, on October 29, 2020.
Aly Song | Reuters
China’s banking regulator on Saturday took over the requirements of the commercial lending business of Internet banks, amid intense control of online lending by Internet giants such as Ant Group, the financial arm of the Alibaba group.
Commercial banks must jointly provide funds to issue loans online with a partner and the share capital of the partner in a loan should not be less than 30%, as reported by the Banking and Insurance Regulatory Commission of China in a warning.
The balance of Internet loans issued by a bank with a partner, including its related parties, should not exceed 25% of the net capital of the first tier of the bank, he said.
In addition, the balance of Internet loans issued jointly by commercial banks and cooperative institutions may not exceed 50% of the total balance of the bank, as set out in the guidelines. In a separate question and answer document, the regulator said companies must comply with the new rules by July 17, 2022.
The regulations will increase potential capital needs for technology platforms like Ant Group, which was on track to raise $ 37 billion in an IPO based on its wide range of online lending services.
Those hopes were dashed when China’s regulators stepped in to stop trading in November, out of concern that excessive consumer debt lending posed a threat to the country’s financial system.