Detailed explanation of the new regulations on Internet loans: the transition period is extended by one year, and the bank's independent risk control requirements are refined
The Internet loan business, which is undergoing continuous rectification, has ushered in new regulations. Some detailed requirements have been tightened, but the transition period has been extended by one year.
On July 15, the China Banking and Insurance Regulatory Commission issued the "Notice on Strengthening the Management of Commercial Banks' Internet Loan Business to Improve the Quality and Efficiency of Financial Services" (hereinafter referred to as the "Notice").
The "Notice" pointed out that there is still a gap between commercial banks and regulatory requirements in fulfilling the responsibilities of the main body of the loan, and further detailed and clarified the requirements of commercial banks in terms of Internet loan management and independent risk control. The content involves customer identity verification, loan fund management, and third-party Platform cooperation agreement specification and many other aspects.
The authoritative partner of Han Kun Law Firm, who has been focusing on the field of financial technology for a long time, believes that some of the requirements in the new regulations will pose more severe challenges to loan assistance, joint loan development models, and Internet loan capital flow control.
However, in the opinion of many people in the industry, the new regulations are more worthy of attention is the extension of the transition period.
The new regulations affirm the positive role of Internet loans, and at the same time extend the period for rectification of existing businesses stipulated in existing documents from July 12 this year to June 30, 2023.
Dong Ximiao, chief researcher of China Merchants Union Finance, believes that the overall description of the new regulations is more positive, reflecting changes in regulatory attitudes.
Authorities also believe that the new regulations also reflect the balance between compliant development of the industry, promoting the economy, and protecting people's livelihood, and set relatively moderate requirements for rectification and improvement.
Temporarily ease the pressure on due compliance
In order to regulate the operation of the Internet loan business of commercial banks, the China Banking and Insurance Regulatory Commission issued the "Interim Measures for the Administration of Internet Loans of Commercial Banks" (hereinafter referred to as the "Measures") in July 2020 and February 2021, respectively. The Circular on Loan Business (hereinafter referred to as the Circular on Internet Loans) puts forward all-round requirements for commercial banks to carry out risk management and loan cooperation management in Internet loans.
According to the "Measures", commercial banks' Internet loan stock business should be rectified within two years, and the deadline is July 12, 2022.
This is also the place where the new regulations have received the most attention - the extension of the transition period.
In response to the "Notice", the person in charge of the relevant department of the China Banking and Insurance Regulatory Commission said in response to a reporter's question that factors such as the repeated epidemic situation and the economic environment in the past two years have had a certain impact on the rectification process of commercial banks' Internet loan business.
Judging from the current situation of the China Banking and Insurance Regulatory Commission, some commercial banks' Internet loan business, especially cooperative loan business, is facing the pressure of due compliance.
In addition, the "Notice" also puts forward specific regulatory requirements for independent risk control. In order to prudently promote rectification and avoid shrinking effects due to business suspension, which affects the financing needs of small and micro enterprises and residents, the China Banking and Insurance Regulatory Commission believes that it is necessary to make overall arrangements for the transition period.
Taking into account factors such as the rectification level, business continuity and connection with credit reporting regulations of commercial banks and cooperative institutions, the "Notice" sets a transition period in accordance with the principle of "breaking the old and the new", which is consistent with the "Administrative Measures for Credit Reporting Business". That is, from the date of publication to June 30, 2023; the transition period of the "Measures" is also extended to June 30, 2023 to ensure that the Internet loan business does not reduce the support for the real economy.
In the authoritative view, one of the key points of the new regulations is the extension of the transition period, that is, taking into account the current impact of the epidemic and the economic situation, to make a new balance between compliant business development, promoting the economy, and protecting people's livelihood.
Dong Ximiao also believes that the overall expression of the "Notice" is relatively positive, reflecting changes in regulatory attitudes.
Judging from the statistics of the Bureau of Statistics and the credit data released by the central bank, the domestic economy has faced considerable downward pressure amid the repeated epidemics since the beginning of this year, and the effective credit demand, especially the demand for medium and long-term loans, has remained sluggish.
Industry insiders generally believe that under such circumstances, Internet loans featuring small amounts, convenience and inclusiveness will become an effective supplement.
The heads of relevant departments of the China Banking and Insurance Regulatory Commission also affirmed the positive role of Internet loans when answering reporters' questions.
"Especially, under the background of epidemic prevention and control, it can serve customer groups that are difficult to reach through traditional financial channels." The person in charge said that the "Notice" encourages commercial banks to steadily promote digital transformation, accurately develop Internet loan products, and increase and improve products. supply, improve the loan response rate, and optimize the loan process.
As of the end of 2021, the balance of Internet loans in my country's banking financial institutions was 5.75 trillion yuan, a year-on-year increase of 21.8%.
Among them, personal Internet loans for production and operation and corporate working capital Internet loans increased by 68.1% and 46.3% respectively year-on-year.
The "Notice" pointed out that banks should give full play to the positive role of Internet loans in helping market entities to bail out, reducing comprehensive financing costs for enterprises, strengthening financial services for new citizens, and optimizing financial support in key areas of consumption.
In addition to alleviating the pressure of compliance deadlines, the "Notice" does not reflect a more radical attitude to the "disconnection" of credit reporting business.
The "Notice" mentioned in the section on strengthening information and data management that, when cooperating with institutions that provide and process personal information, banks should effectively conduct security assessments of the cooperative institutions, including but not limited to personal information protection compliance systems, supervision and management. Mechanisms, information processing specifications, security protection measures, etc.
There are still many requirements for new and refined content
In the opinion of many Internet platform business people, apart from the extension of the transition period, the "Notice" does not disclose much incremental information, and many contents have been mentioned in the guidance process of the early supervision window.
However, the reporter compared the "Notice" with the "Measures" and the "Internet Loan Notice" and found that the new regulations put forward a number of more detailed requirements for banks in terms of loan management and independent risk control, and cooperation with third-party institutions to rectify Challenges intensify.
The "Notice" pointed out that since the promulgation of the aforementioned two normative documents, commercial banks have gradually optimized their business processes and enhanced their risk control capabilities in the rectification of their Internet loan business. .
However, commercial banks still have problems such as insufficient fulfillment of the main responsibilities of the loan, excessive reliance on cooperative institutions in core risk control links such as credit approval, loan issuance, and fund monitoring.
First of all, on the basis of "credit approval, contract signing and other core risk control links should be carried out independently and effectively by commercial banks", the first mention of the lender "independent and effective identity verification", compared to the previous "the borrower's identity verification shall not be fully authorized" Entrusting a cooperative institution to handle it”, the bank’s responsibility is more clear.
The "Notice" requires that commercial banks, as the main body of loan management, should improve the risk management and control capabilities of Internet loans, strictly perform the main responsibilities of loan investigation, risk assessment, credit management, loan fund monitoring, etc. Money laundering and other requirements to prevent the "hollowing out" of loan management.
In terms of information and data management, the "Notice" requires banks to obtain complete and accurate information and data required for identity verification, pre-loan investigation, risk assessment and post-loan management, and take effective measures to verify their authenticity. Strengthen the protection of borrower information.
The authority believes that considering the bank's requirements for user information control and business independence, it may be the general trend to conduct Internet loan business in the "small program mode" or "H5 jump mode" in the future.
At present, the most mainstream one-stop loan application model in the market on the front-end loan assistance platform will be less and less room for operation.
The second is to refine the loan fund management specifications, and make clear requirements for each link of the capital flow, including the issuance of operating instructions, the setting of loan repayment paths, etc.
The "Notice" requires that key links such as loan fund issuance, principal and interest recovery and withholding, and stop payment shall be independently decided by the bank, and instructions shall be initiated by the bank.
In the case of self-payment, the funds shall be directly released to the borrower's bank account; in the case of entrusted payment, the commercial bank shall perform the entrusted payment responsibility, and finally pay the loan funds to the transaction object that meets the purpose stipulated in the borrower's contract.
Commercial banks shall independently and completely retain account flow information such as loan fund disbursement, principal and interest recovery, take the initiative to strengthen loan fund management, and take effective measures to monitor the use of loan funds, ensure the safety of loan funds, and prevent cooperative institutions from intercepting, pooling, or misappropriating.
The third is to further standardize the cooperation business of third-party institutions, requiring commercial banks to sign cooperation agreements for co-investment, information technology cooperation and other business categories and clarify the rights and responsibilities of all parties, and shall not mix other service agreements with loan investment agreements.
At the same time, the written agreement signed between the commercial bank and the cooperative institution shall clearly stipulate the specific requirements for the submission of relevant information.
From a practical point of view, the services provided by third-party cooperative institutions in the current Internet loan business are not limited to "joint investment and information technology cooperation", but may also include marketing and customer acquisition, payment and settlement, risk sharing, and overdue settlement.
Authorities recommend that, for such institutions and services, banks and third-party institutions should sign separate agreements by business type.
It is particularly worth noting that for the joint loan model, different funders shall not mix other service agreements in the "loan financing agreement".
In addition, the "Notice" also adds new conditions for cooperative institutions. In addition to regularly assessing the comprehensive financing cost of cooperatively issuing Internet loans, it also requires banks to strengthen the compliance management of cooperative institutions' marketing and publicity behaviors, restrict or refuse to cooperate with the following Institutional cooperation in behavior: cooperative institutions and their related parties collect loan funds in violation of laws and regulations, set unfair and unreasonable cooperation conditions, fail to provide necessary information for loan management in accordance with laws and regulations, and service charges do not match the quality and price.
Some people in the industry believe that this move can reduce the overall cost of capital in an orderly manner, thereby better safeguarding the rights and interests of financial consumers.
Author: Qi Ning