Rules relaxed for consumer finance companies

The China Banking Regulatory Commission recently revised rules governing a consumer finance company pilot project, the commission said on its official website.

According to the modified rules, domestic non-financial enterprises will be allowed to become major investors in a consumer finance company. Previously, only financial enterprises could do that.

Their annual revenue, however, must total more than 30 billion yuan ($4.92 billion).

The number of cities where consumer finance companies can be set up will increase from four to 14, according to the new rules.

Consumer finance companies extend small loans to consumers but are not allowed to take public deposits. They are widespread in developed countries but didn't start appearing in China until 2010, when Beijing started a pilot.

The new rules also allow consumer finance companies to accept deposit money from shareholders, and the minimum stake for the main sponsor has been lowered from 50 percent to 30 percent, in an effort to diversify shareholding structure.

The loan cap also was adjusted to 200,000 yuan, from five times an applicant's monthly salary.