The Ant and Chanting Chanting business will be regulated to restrict online small loans.

Several departments, including the China Banking and Insurance Regulatory Commission (CBIRC), have drafted new rules to require microfinance companies not to carry out online microlending business across provincial administrative regions without the approval of the State Council’s banking regulatory authority. The suspended listing of Ant Group, which operates a financial business, could be brought under the regulation.

Ant Group was suspended at home and abroad on the day of listing, November 2, the China Banking and Insurance Regulatory Commission and the People’s Bank of China and other departments announced the “Interim Measures for the Administration of Network Microfinance Business (draft)”, the draft, said the network operating microfinance business registered capital of microfinance companies, not less than 1 billion yuan, and a one-time paid-up monetary capital; cross-provincial administrative areas operating network microfinance business of microfinance companies, registered capital of not less than 5 billion yuan, and a one-time paid-up monetary capital.

Officials set the upper limit for online microcredit financing

The Measures clearly stipulate that the balance of non-standardized financing through banks and other online small loans shall not exceed one times the net assets. The balance of standardized financing through the issuance of bonds, asset securitization (ABS) and other standardized financing shall not exceed four times of the net assets.

Ms. Ding, an analyst at ICBC’s Guangzhou branch, said in an interview with this station on Monday (Nov. 9) that although Ant Financial was renamed Ant Technology in July, he is involved in China’s financial lending business and is not subject to regulation: “When Ant Financial was preparing for its IPO this year, he changed his company name Ant Financial to Ant Technology Group Ltd. but His operation is micro-lending, setting up an intermediary platform where you earn a commission. If he’s a financial services provider, he has to be regulated by financial institutions. Although you say you do the technology, in fact, the financial system is networked.”

According to the content of the draft understanding, if the “Ant Financial Services” holds 100 billion yuan of capital; then the scale of lending and financing can not be more than double, that is, 200 billion yuan; even if the issuance of bonds, or asset securitization (ABS), that is, before the Ant United Bank loan model, can not be more than four times, that is, 400 billion yuan.

Ms. Ding said that the funds for the small loans granted to young people by Ant Group’s Ant Flower Chanting and Lending Chanting come from banks, which will ultimately be held responsible for any future financial risks, so the authorities need to set rules: “He lends money from where the money comes from, and also from banks. Ant Financial Services is not responsible for bad debts, once the lending is risky, then it is the banks that are ultimately responsible.”

The announced “measures” has seven chapters and 43 articles, divided into general principles, business access, business scope and basic rules, business management, supervision and management, legal responsibilities, by-laws.

Seeking to maintain stability to limit the network of small loans tactics crude without facing the back of private demand

Song Yimin, a scholar in Hangzhou, Zhejiang province, said to this station that a few years ago, many officially sanctioned real financial companies in Zhejiang province collapsed due to a break in the financial chain, thus triggering protests such as investors petitioning to defend their rights. Authorities, fearing an increase in the number of companies in the online financial industry and a loss of financial control in the future, decided to enact restrictive measures: “He is concerned about social stability, on the one hand, to suppress these companies and close them down,” he said. On the other hand, he is suppressing the people who have been harmed, and since there are many such incidents and more and more victims, the authorities feel that they threaten his social stability, so he now hopes that by directly blocking online credit, there will never be a new large number of people who have been harmed.”

Ant Group’s flower chanting and borrowing became the most used consumer credit products, serving 500 million users in the past year, of which the average balance of flower chanting is only 2,000 yuan.

Some insiders pointed out that this new regulation means that the online microlending business is beginning to be more closely supervised, with its regulatory rules modeled on those of traditional financial institutions, according to

Song Yimin criticized the authorities for using a simple and brutal way to block online businesses: “Instead of seeing the multifaceted needs in this middle and carrying out real guidance and supervision, it used to be either regardless, now it’s a straightforward way to completely negate the matter and take the simplest and most brutal way to solve the problems that have emerged.”

The official offer for private comment this time is for one month, until Dec. 2.