Measures for the Administration of Personal Loans

Measures for the Administration of Personal Loans

(Issued by Order No. 3 [2024] of the State Administration for Finance Regulation on February 2, 2024 and shall come into force on July 1, 2024)

Chapter I General Provisions

Article 1 For the purposes of regulating the personal loan business of banking financial institutions, strengthening the prudential business operation and management of the personal loan business and promoting the sound development of the personal loan business, these Measures are developed according to the Banking Supervision Law of the People's Republic of China, the Law of the People's Republic of China on Commercial Banks and other relevant laws and regulations.

Article 2 For the purposes of these Measures, “banking financial institutions” (hereinafter referred to as “lenders”) refer to commercial banks, rural cooperative banks, rural credit cooperatives and other financial institutions taking public deposits formed in the territory of the People's Republic of China.

Article 3 For the purposes of these Measures, the term “personal loan” refers to a loan in domestic and foreign currencies granted by a lender to a natural person who meets the prescribed conditions for personal consumptions, production business operation, and other purposes.

Article 4 A lender shall carry out personal loan business under the principles of legitimacy, compliance, prudential operation, equality, free will, fairness and good faith.

Article 5 A lender shall establish an effective control system covering the whole process of the personal loan business, develop loan management rules and operating instructions for each loan type, specify corresponding borrowers and scope, implement differentiated risk management, and establish assessment and accountability systems for each operation link.

Article 6 A lender shall establish a risk limit management system for personal loans according to the actual risk management needs.

Article 7 The purposes of personal loans shall comply with the provisions of the relevant laws and regulations and the relevant policies of the state, and a lender shall not grant any personal loan without designated purposes.

A lender shall strengthen the payment management of loan funds and take effective measures to prevent risks in the personal loan business.

Article 8 The term of a personal loan shall comply with the relevant rules of the state. The term of a loan for personal consumption shall not exceed five years; and the term of a loan for production and business operation shall generally not exceed five years, and for a loan with relatively long recovery cycle of operating cash flow corresponding to the purpose of the loan, the loan term may be appropriately extended, for up to 10 years.

Article 9 The interest rate of personal loans shall follow the market-oriented principle of interest rate and be determined by the lender and the borrower through consultation in compliance with the relevant rules of the state.

Article 10 A lender shall establish a reasonable income and debt repayment ratio control mechanism and reasonably determine the amount and term of a loan in consideration of the borrower's income, debt, expenditure, purposes of loan, guarantee status and other factors, and make sure that the repayment made by the borrower in each installment is within his ability to repay the loan.

Article 11 The State Administration for Finance Regulation and its local offices shall implement supervision and administration of the personal loan business according to the law.

Chapter II Acceptance and Investigation

Article 12 An application for a personal loan shall meet the following conditions:

(1) The borrower is a citizen of the People's Republic of China who has full capacity for civil conduct or a foreign natural person who complies with the relevant rules of the state.

(2) The purposes of the loan are clear and legal.

(3) The amount, term and currency of the loan as indicated in the application are reasonable.

(4) The borrower is willing and able to make repayment.

(5) The borrower has a sound credit standing.

(6) Other conditions as set forth by the lender.

Article 13 A lender shall request a borrower to file an application for personal loan in writing and provide relevant materials which may prove that he meets the conditions for loan.

Article 14 After accepting a borrower's loan application, a lender shall perform the duties of due diligence investigation, investigate and verify the authenticity, accuracy and integrity of the contents and other relevant matters of the application for personal loan and then form investigation opinions.

Article 15 Loan investigation shall cover, but not be limited to, the following:

(1) The basic information on the borrower.

(2) The borrower's income.

(3) For a loan to be used for production and business operation, the business conditions of the borrower shall also be investigated.

(4) The borrower's source of funds, ability for repayment, and mode of repayment.

(5) The guarantor's will and guarantee capacity or ownership of collateral (mortgage), value and cashability.

Article 16 Loan investigation shall be carried out in the form of combining on-site field investigation and off-site indirect investigation, by adopting on-site verification, telephone inquiry, information consultation and other digital electronic investigation and other ways and methods.

For loans with an amount not more than 200,000 yuan, where a lender may effectively verify the authenticity of relevant information by off-site indirect investigation, and may make a risk assessment of the borrower based on it, on-site field investigation may be simplified or no longer be conducted (excluding personal housing loans).

Article 17 A lender shall establish and improve the loan investigation mechanism, specify the ways and means of investigation into various matters, and ensure the authenticity and effectiveness of the loan investigation.

Where a lender entrusts some specific matters in the loan investigation to a third party for handling on a commission basis, the legitimate rights and interests of the borrower shall not be harmed, and the relevant risks shall be ensured to be controllable. A lender shall specify the qualifications of the third party, establish a list management system, and review and update the list on a regular basis.

A lender shall not entrust the core matters of risk control in the loan investigation involving a borrower's true intention, income level, debt situation, source of its own funds and access to external evaluation institutions to a third party.

Article 18 A lender shall establish and implement the interview system for loans.

A lender may interview with a borrower by video according to business needs (excluding personal housing loans). A video interview shall be conducted on a lender's own platform, and the video shall be recorded and saved. A lender shall take effective measures to determine and verify the true identity of a borrower and the authenticity of the information involved.

Chapter III Risk Evaluation and Examination and Approval

Article 19 A lender shall comprehensively examine the legality, rationality and accur......