China’s Ministry of Finance Revises Performance Evaluation Standards of Commercial Banks
According to the new guidelines, the commercial banks will be evaluated using four different comprehensive benchmarks. The updated benchmarks are as follows:
1. Serving national development goals and the real economy;
2. Achieving high-quality development;
3. Controlling and preventing risks; and
4. Improving operational efficiency.
The new standards replace the previous measures of profitability, business growth, asset quality and solvency. Each category will contribute 25% to the overall performance evaluation.
People’s Bank of China (PBOC) Releases Financial Standards for Big Data-Based Payment Risk Control
On 3rd December 2020, the PBOC officially released the "Technical Specifications for Intelligent Prevention and Control of Payment Risks Based on Big Data". The Payment Risk Specification stipulates the technical framework and system implementation security required to control and prevent payment risks based on big data, artificial intelligence and other technologies. It is applicable to payment-related commercial banks, non-bank payment institutions, and clearing institutions to carry out payment risks assessments.
Mashang Consumer Finance to go Public
According to the Chongqing Supervision Bureau of the China Securities Regulatory Commission, Mashang Consumer Finance (马上消费金融) has signed a counseling agreement with a sponsor and plans to go public. The company went through the counseling record registration with the Chongqing Securities Regulatory Bureau on January 6th, 2021. It would be the first consumer finance company to be listed on the A-share market.
National Credit Loan Platform Helps Facilitate Over RMB1 Trillion in Loans
According to the National Development and Reform Commission (NDRC), as of the end of December 2020, the National Integrated Credit Service Platform for Small and Medium-sized Enterprise Financing (also known as the "National Xinyidai Platform") had integrated with 178 local platforms or sites and helped issue a total of RMB1.01 trillion (US$154 billion) in credit loans.
The platform is a comprehensive national credit information sharing platform for financing established by the NDRC and the China Banking and Insurance Regulatory Commission. It serves to integrate administrative licensing, administrative penalties, taxation, social security, provident funds, utilities, warehousing and logistics, and public resource transactions.
Pilot Program of Digital Currency Electronic Payment (DCEP) Card-Wallet launches in Shanghai
A physical card-wallet pilot program has been launched in a canteen at Shanghai Jiao Tong University School of Medicine’s Tongren Hospital. Staff at the hospital can use the card-wallet to make purchases at the many shops in the hospital. The card shows spending, balance, and the remaining number of offline payments available via a small screen at the top-right corner of the card. In the future, DCEP will be tested in various scenarios such as for hospital diagnosis and treatment payments, physical examinations fees and parking fees.
Bilibili Pay Is on the Way
Bilibili (NASDAQ: BILI), also nicknamed B Site, is a video sharing website based in Shanghai with over 180 million registered users, mostly consisting of the younger generation in China.
Bilibili appears to be preparing to enter the payment business in China, with Shanghai Huandian Information Technology Co., Ltd., an affiliate of B Site, completing the filing of domain names such as "bilibilipay.com" and "bilibilipay.cn". Additionally, recruitment websites indicate that B Site has been filling payment business-related job positions since November last year.
Macao to Launch Integrated Mobile Payment Tool for Merchants
The Monetary Authority of Macau is launching a new product called ‘聚易用Simple Pay’, an integrated mobile payment tool for merchants. Using the product, merchants will be able to use a single terminal to accept all local QR code payment tools, giving customers the choice of using any local QR code payment tool for purchases. Tourists can continue to use overseas wallets to pay with the new tool too.
Tenpay Fined RMB8.76 million for Eight Violations of Regulations
On 31st December 2020, Tenpay, the operator of Wechat Pay, received a fine of RMB8.8 million (US$1.4 million). According to the PBOC, the violations include failing to ensure the consistency of transaction information in the entire payment process and providing payment services for illegal and false transactions, among others.
Tenpay has been fined three times in the past two years, with fines totaling RMB10.66 million (US$1.6 million).
Pengyuan Fined for Conducting Personal Credit Reporting Business Without License
Pengyuan Credit (鹏元征信), one of the 8 company shareholders of Baihang Credit, the first and only credit agency in operation in China with an individual credit license, recently received a record fine of RMB19.8 million (US$3.1 million). The report states that Pengyuan’s violations include conducting personal credit checks without a license and failing to file a notice on the appointment of new senior management in time. This is the first fine from the PBOC on such an issue.
CBIRC: Beware of the Hidden Risks Behind Excessive Lending Marketing
On December 29th, the China Banking and Insurance Regulatory Commission (CBIRC) issued a risk reminder on the dangers of online platforms that allow users to borrow excessively. CBIRC stated that some online platforms promote various misleading conditions to over-market financial products such as loans or credit card overdrafts to induce excessive amounts of borrowing. In response, the Consumer Rights Protection Bureau of the CBIRC issued the sixth risk warning for 2020 to remind consumers to establish a rational borrowing attitude.
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The PBoC Revises AML/CTF Management Measures
The PBoC is soliciting public consultation on a revised draft of its Anti-Money Laundering (AML) and Counter-Terrorism Financing (CTF) for Financial Institutions measures. The deadline for feedback is January 30, 2021. The revised draft expands the scope of AML/CTF supervision by adding non-banking payment institutions, microfinance companies who engage in online microfinance business, and institutions who engage in financial services such as consumer finance, loan, and bank wealth management subsidiaries. The revised draft also expands supervision to bank card organizations and fund clearing institutions.
China Expands Regulatory Supervision to Include “Finance-like” Institutions
Financial leasing, commercial factoring and other such “financial-like” enterprises are to be included in provincial lists of approved financial companies under regulatory supervision. As of December 28th, Hubei and Shandong province announced the first batch of regulatory lists of 21 and 29 financial leasing companies respectively. In addition, they announced lists including 8 and 33 commercial factoring companies respectively too.
The PBOC’s Shanghai Fintech Sandbox Announces a Second Batch of Innovative Applications
According to the Central Bank’s Shanghai branch, its Shanghai Fintech Sandbox has announced five new innovative applications. The five applications are as follows:
1. Remote video banking service;
2. Business service platform based on big data;
3. Image privacy protection products based on multi-party secure computing;
4. Data application based on homomorphic encryption; and
5. Differentiated marketing platform.
These applications are designed to provide barrier-free financial services, practice inclusive finance, and to narrow the "digital gap" for individuals and SMEs in a safe sandbox environment.
Beijing Metro Starts Testing Payments by DCEP
On December 29th, the Beijing Metro Daxing Airport Line launched a pilot application for the use of DCEP in preparation for the Beijing Winter Olympics. Participants in the pilot are invited to open a digital RMB wallet to use DCEP to buy subway tickets and experience the use of DCEP wearable devices to pass subway gates by "touching" ticket machines. DCEP wallets are provided in different forms such as cards, wearable badges, watches, and wristbands.