China approves country’s second consumer credit reporting agency with and Xiaomi take stakes

China’s central bank granted approval for the set up of a personal credit agency to be jointly held by an investment arm of the Beijing government, subsidiaries of e-commerce giant and Xiaomi Corp, and facial recognition start-up Megvii Technology.

The agency, named the Pudao Credit Rating Co Ltd, will be registered with 1 billion yuan ($153.19 million) in Beijing, a statement from the People’s Bank of China (PBOC) said.   The agency will become the second personal credit agency licensed by the PBOC.

In recent years, the central bank has been trying to link loan data among different online lending platforms and share credit information to prevent over-borrowing and fraud. In 2018, it launched Baihang Credit, Chi­na’s first licensed personal credit agency with nine parties co-invested, including credit rating units of Ant Group and Tencent Holdings.

The PBOC is also pushing micro-lenders that source clients from e-commerce platforms to share credit information with the central bank in a move to strengthen supervision on such loans amid fears of rising defaults and deteriorating asset quality. Beijing Financial Holdings Group, owned and controlled by the Beijing municipal government, will take a majority stake of 35% in Pudao Credit, with JD Digits taking 25% and Beijing Xiaomi Technology Co and Megvii Technology each taking 17.5% respectively, according to the statement. The remaining 5% will be held by a private equity firm.