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China to set up consumer finance firms

(Xinhua)
Updated: 2009-08-14 00:38

BEIJING：China's banking regulator said Thursday that it would launch consumer finance companies and start to set up such firms in four cities, including Beijing and Shanghai, on a trial basis.

Such firms are expected to better finance people's purchase of consumer goods with more flexible small loans that require no mortgage and fewer procedures.The move came as the country strives to stimulate consumer demand for growth, after exports slumped as a result of the global financial crisis.

The consumer finance firm is not allowed to accept deposits, and would have to rely on its own capital in the initial stage, China Banking Regulatory Commission (CBRC) said in a statement on its Web site.

The commission plans to establish one consumer finance company in  Beijing, Shanghai, Tianjian and Chengdu.

At the trial stage, the firms are only allowed to provide loans to finance people's purchase of durable goods and other consumer expenditures excluding home and auto purchases, according to the CBRC.

The amount of each loan offered by a consumer finance company is usually capped under 100,000 yuan (14,706 U.S. dollars).

Different from applying for loans at banks, clients could expect to receive the loan within an hour after the application and services would be available even after business hours, or on weekends.

Investors in the consumer finance company should be domestic and foreign financial institutions or others that are authorized by the commission, and the latest annual assets of the investor should be no less than 60 billion yuan, according to the statement.

The minimum registered capital of a consumer finance company is set at 300 million yuan.