Micro-lenders banned from granting student loans
China has banned micro-lenders from granting consumer loans to students, the country’s main banking regulator said on Wednesday.
A statement issued jointly by the China Banking and Insurance Regulatory Commission, the People’s Bank of China, the Central Bureau of Cyberspace Affairs, the Ministry of Education and the Ministry of Public Security, said some micro- Lenders have targeted college campuses and issued consumer loans online through cooperation with tech companies.
These practices have caused some students to spend too much money and fall into the debt trap.
The statement also said that micro-lenders should strengthen client identity verification and not target students for online consumer loans or conduct targeted marketing to them.
They should also gradually reduce existing student loans. Institutions without a financial license should not offer credit services to students, the statement said.
Banks should make sure students have a second source of debt repayment and get written statements from them that they approve the loan and are ready to pay it for students, he said. added.