Credit Information China: CCRC’s online P2P Credit Platform

The People’s Bank of China’s Credit Reference Center (CCRC), through its subsidiary Shanghai Credit Information Services Co., Ltd (CIS), has recently launched an online financial credit system – NFCS.  According to CIS, NFCS now has 370 loan companies and 524,000 registered customers as of the end of December 2014.  An insider of CIS’ credit business branch claims the number of companies listed on the system is growing at a double digit rate per month, reaching more than 400 as of the end of January 2015.  NFCS could introduce a listing fee in the future.

An online P2P (Person to Person) sector to improve the credit system has been long-awaited, and provides a much needed boost.   CIS commented on the launch of NFCS: the system will collect and collate the basic information of customers on both ends including, loan application information, credit information, loan repayment information, and special transaction information through effective information sharing to guard against fraudulent borrowers, excessive debt and other credit risks. NFCS system can also reduce the overall risks, provide historical transactions and debt records and reduce costs.

An underdeveloped credit system has restricted the development of the lending industry.  While more private institutions have entered the credit industry, many industry players expressed their desire to be a part of the central bank’s credit system.  Access to NFCS is currently free of charge.

The P2P industry is developing rapidly in China.  The segment of borrowers using P2P are individuals that usually cannot get the bank credit or there is insufficient credit information.  The growth of P2P accommodates the needs of this particular borrower segment and generally the business risk of the group is higher than bank customers.  According to statistics, the P2P net loan amount is estimated to be 300 billion Yuan in 2014.   Due to the size of the loans extended, it’s imperative to set up a credit referencing system to safeguard the P2P loan business.

Source: Chinese news coverage