# China sets higher bar for consumer finance companies
Author: Pal sinha, Barnali
Author URL: https://startupobserver.com/author/pal-sinha-barnali/
Published: 2024-03-18
Category: Finance
Category URL: https://startupobserver.com/category/finance/
Meta Title: China Raises Bar for Consumer Finance Firms
Meta Description: China has raised the bar for non-bank financial businesses offering small personal loans. New regulations set by NFRA take effect on April 18.
URL: https://startupobserver.com/china-sets-higher-bar-for-consumer-finance-companies/

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## China sets higher bar for consumer finance companies

BEIJING (Reuters) – [China](https://startupobserver.com/china-believes-france-will-provide-fair-business-environment-for-chinese-firms-foreign-ministry-says/) has changed the rules for consumer finance firms for the first time in a decade, setting a higher bar for non-bank [financial](https://startupobserver.com/banks-delayed-handling-of-losses-worsen-financial-crises/) businesses providing small personal loans in the world’s second-largest economy.

The stricter measures, which will take effect on April 18, come amid a regulatory tightening across China’s financial sector, despite the economy’s wobbly post-COVID recovery, and analysts see them as potentially deterring new players.

The revised rules, published by the National Financial Regulatory Administration (NFRA) after a one-month consultation ended mid-January, are in line with the proposed amendments.

Under the new regulation, firms that provide [consumer](https://startupobserver.com/essity-mulls-selling-vinda-stake-and-consumer-tissue-private-label-europe-business/) financing for other than home and car purchases must have a minimum registered capital of 1 billion yuan ($139 million), more than three times the minimum 300 million yuan required under 2014 regulation.

A major investor in a consumer finance firm must also hold a stake of at least 50%, up from 30% previously.

Financial institutions that are major investors must have total assets of at least 500 billion yuan by the end of the most recent fiscal year, up from 60 [billion](https://startupobserver.com/munich-re-q1-net-profit-up-68-in-line-with-preliminary-figures/) yuan previously.

A non-financial major investor, meanwhile, needs to have at least 60 billion yuan in operating income in the most recent fiscal year, double the previously required number.

($1 = 7.1981 Chinese [yuan](https://startupobserver.com/chinas-state-banks-seen-selling-dollars-offshore-to-slow-yuan-drop-sources/) renminbi)

(Reporting by Qiaoyi Li and Ryan WooEditing by David Goodman and Mark Potter)


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