Xiaomi, JD.com-backed firm on track to become China’s second personal credit ratings agency
- China’s central bank has accepted the application of Pudao Credit to operate another personal credit ratings firm in the world’s second-largest economy
- Beijing Financial Holdings Group, a company owned by the Beijing local government, will have a 35 per cent controlling stake in Pudao Credit
It is unclear when Pudao Credit will receive its licence from the PBOC.
“Based on the issuance of the first [personal credit ratings] licence, I expect this second one to be approved in one to three months,” said Wang Pengbo, a senior finance analyst based in Beijing.
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The additional personal credit reporting platform could help provide a more comprehensive picture of an individual’s financial position and their credit risk.
“The upcoming second licence will be good for the fintech industry,” Wang said.
“Firstly, more companies will be able to conduct business based on personal credit, which will help them develop and standardise their operations,” he said. ”Secondly, the credit industry itself will be optimised when there is a second ratings agency.”
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Personal credit ratings firms can work with various financial institutions like microlenders and consumer loan providers.
Baihang Credit, for example, had partnered with more than 1,700 financial institutions as of May 22 to obtain data on more than 85 million people. It shared that information with nearly 1,000 institutions which signed up for the service, according to the firm’s latest report.
In addition, Baihang Credit also has access to other data, such as phone and travel records, which are deemed as “alternative financial information”.
In July this year, Baihang Credit was authorised to expand its credit rating business to cover enterprises.
Still, sharing data between fintech firms and a personal credit ratings agency can be complicated.
Ant Group, operator of digital wallet Alipay as well as a stakeholder in Baihang Credit, runs its own commercial consumer credit assessment service called Zhima Credit, which does not share information with the credit ratings agency.
“Zhima Credit does not exchange data with Baihang Credit, because the service scope does not include personal credit referencing and reporting,” said Shao Wenlan, former chairwoman at Zhima Credit, said in October last year.