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BEIJING, Mar 17 (Reuters) – China’s leading banking regulator announced Wednesday that it had banned micro-lenders from providing new consumer loans to college students because of concerns about over-indebtedness and financial risk.
It also urged micro-lenders to gradually reduce existing student loans, according to a statement on its website, and banned unlicensed institutions from offering credit services to college students.
The statement was published jointly 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.
China’s financial regulators have long warned of the risks of easy access to credit through numerous consumer apps, and have taken a number of steps since last year to tighten supervision over online lending practices.
The campaign was particularly targeted at tech companies looking to expand into the financial arena and resulted in the $ 37 billion initial public offering of the Ant Group on hold last year. She obtained 40% of her profits from her two large online microcredit units.
“Some micro-lenders have targeted university campuses and operated inductive marketing through collaboration with technology companies,” the statement said. “These practices have led college students to over-consume on internet platforms and have left some students in debt traps.”
Traditional banks and consumer finance firms should also tighten their risk controls on student customers and ensure they have a second source for debt settlement, the statement said.
“We should resolutely restrict Internet platforms in order to ‘harvest’ college students and protect 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