System will allow mainland banks - which hold 90 billion yuan in overdue car loans - to share data on customers
Alarmed by billions of yuan in bad car loans, China's central bank has announced that a new nationwide credit data system will be installed by the end of this year, as a step towards a national network and a prerequisite for widespread use of credit cards.
Eager to harness consumer credit as an engine for growth, mainland banks have since 2001 aggressively extended loans to individuals to buy property, cars and household appliances, and issued more than 700 million bank cards.
But careless lending, lack of an effective credit rating system and widespread fraud have left Chinese banks holding 90 billion yuan in overdue car loans.
The People's Bank of China said over the weekend that it had selected 15 commercial banks in seven cities and provinces to create a common database on individuals that would come into operation at the end of the year.
'Such a system is critical for the stage which China's banking system has reached,' said Dai Genyou, director of the bank's credit management system. 'Banks cannot rely on their own information systems alone and must use assessments from outside. The current system is chaotic and some organisations act in an improper way.'