SHANGHAI Aug 25 China should tighten its
supervision of the micro-finance industry to guard against risks
to financial stability, Chinese news outlet Caixin reported
China central bank vice governor Chen Yulu saying at a Beijing
conference on Thursday.
Chen's comments come after the country's banking regulator
on Wednesday released detailed rules to curb an unruly
peer-to-peer (P2P) lending sector, underlining China's
commitment to the clamp down on a sector riddled with runaway
managers and pyramid schemes.
Microfinance has grown quickly in China, driven by demand
from cash-starved small- and medium-sized enterprises who are
turned away by traditional lending institutions that lean
towards risk-free state-owned enterprises. P2P firms are
Chen said that micro-finance firms and traditional lending
institutions are operated and managed differently, so regulation
should take this into account by remaining flexible.
At the same time, regulation of micro-finance needs to
improve by accounting for risks in the different sectors that
firms operate in, Caixin reported Chen saying at a microfinance
Although P2P and traditional lenders are supervised by the
banking regulator, Chen said the central bank will promote
micro- and inclusive-financing as an important part of
supply-side structural reforms, using monetary and credit policy
tools, improving supporting structures and supporting innovation
among other things.
(Reporting by Engen Tham; Editing by Shri Navaratnam)