PBOC calls on Alibaba, Tencent to help develop credit reporting market
Boost for small businesses and individuals as eight firms cleared for credit reporting services
The People's Bank of China is ceding some control over the personal credit reporting business to the private sector, a major step that is set to help small companies and individuals access loans in a system that has traditionally shut them out.
A notice issued by the central bank this week requested eight firms, including those controlled by Tencent Holdings, Alibaba Group Holding and Ping An Group, to prepare credit reporting operations.
The move could pave the way for the full marketisation of the mainland's 100 billion yuan (HK$124.7 billion) credit reporting industry, which has been dominated by the government.
The PBOC would give the companies six months to prepare these operations.
The central bank operates a personal credit reporting service with a store of loan and credit-card information. But that system is limited to users within the formal banking system and fails to capture unbanked citizens who have never taken out, or have been turned down on, formal loans.
Analysts have also noted that the government system is slow and the technology outdated.
Companies such as Alibaba and Tencent have a wealth of personal credit information derived from the millions of daily transactions between merchants that operate on their online shopping platforms and the shoppers themselves. They have also developed the technology to crunch the data.