CBRC unveils norms for consumer finance firms

Consumer finance firms are likely to boost consumer spending in China and provide competition to the consumer lending services offered by banks, analysts said.

The China Banking Regulatory Commission (CBRC) issued draft rules on Tuesday that would allow domestic and foreign financial institutions to establish consumer finance firms to provide personal loans to finance purchases of durables. The CBRC said it is seeking feedback on the rules from the public till June 12.

"Personal loans account for only a small portion of the loan portfolio in most Chinese banks. This is mainly because loans to consumers have a relatively high cost compared to corporate loans," said Zhang Jing, analyst, Minzu Securities.