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BEIJING, March 17 (Reuters) - China’s top banking regulator said on Wednesday it had banned micro lenders from granting new consumer loans to college students over concerns of over-lending and financial risks.
It also urged micro lenders to gradually reduce existing loans to students, and banned institutions without financial licenses from offering credit services to college students, according to a statement on its website.
The statement was jointly released by five government agencies including the China Banking and Insurance Regulatory Commission (CBIRC), the People’s Bank of China and the Ministry of Public Security.
Chinese financial regulators have long warned of the risks brought by easy access to loans via manifold consumer apps, and rolled out a slew of measures since last year to tighten the oversight of online lending practices.
The campaign was particularly targeted at technology firms looking to expand into the financial space, and led to the suspension of Ant Group’s $37 billion initial public offering last year. It generated 40% of its profits from its two major online micro lending units.
“Some micro lenders have targeted college campuses and conducted inductive marketing via the cooperation with technology firms,” the statement said. “These practices have induced college students to excessive consumption on internet platforms, and caused some students falling into debt traps.”
Traditional banks and consumer finance firms should also tighten their risk controls involving student clients, and make sure they have a second source of debt repayment, the statement said.
“We should resolutely curb the internet platforms to ‘harvest’ college students, and safeguard their rights and interests,” the CBIRC said in a separate statement.
Reporting by Cheng Leng and Ryan Woo; Editing by Andrew Heavens and Kim Coghill
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