The China Banking Regulatory Commission has issued a circular which requires that Chinese banks do not provide credit card services to students less than 18 years old.
Furthermore, CBRC asks banks to obtain a written consent from parents of students who are over 18 years old stating that they are willing to pay back the loan for their child if the child fails to do so.
In the past five years, commercial banks in China have been taking the issuance of credit cards as a main index of their performance. As a result, they have been busy issuing the cards without considering the quality of the cardholders. To call an end to this problem, CBRC has asked banks not to use the issuance of card as the only way to judge the performance of its marketing staff.
A representative from a Chinese bank has also disclosed to the media that the abuse of credit granting has become a major problem in banking industry. It says that data released by China's central bank showed that the rate of credit card bad accounts has been on the increase and by the end of the first quarter of this year, the total debt outstanding for over six months had reached CNY4.97 billion, which was an increase of 133.1% over the same period last year.
As a way to address the bad debt problem, CBRC asks each bank to conduct a due diligence review on the credit levels and the payment ability of credit card applicants by requiring them to have a fixed job, or stable income or a reliable insurance for repaying any debt.
