China’s Ant Group is lowering borrowing limits for some young users of its Huabei virtual credit card product, the company said on Wednesday, a month after China frozen the fintech beast’s $37 billion public record plan.
The credit limit reduction is meant to promote more “rational” spending habits among users, Ant added in a text message to journalists at our partner news agency Reuters.
It did not provide further specifics.
The move comes as Chinese authorities tighten their grasp on fiscal technology companies, amid concerns that lower income borrowers could get into debt trouble.
Ant, which can be controlled by Alibaba founder Jack Ma, has two credit subsidiaries, Huabei and short-term consumer loan provider Jiebei, which have been used by around 500 million people in the 12 months to June 30, Ant said in its IPO prospectus.
Last month, regulators published a consultation paper on trimming rules for micro-lending that could need them to finance at least 30 percent of any loan they make jointly with banks. Only 2% of those loans Ant had eased as of end-June were on its own balance sheet, its IPO prospectus showed.
Ant’s credit businesses had loan balances of 2.1 trillion yuan (approximately $321.25 billion) in the end of June, of which 1.7 trillion yuan was credit. That contrasts to 8.1 trillion yuan of short-term customer loans issued by Chinese banks.
The team at Platform Executive hope you have enjoyed this news article. Initial reporting via our official content partners at Thomson Reuters. Reporting by Yingzhi Yang and Tony Munroe in Beijing. Editing by David Goodman, Kirsten Donovan.
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