China has published new measures designed to place greater oversight on non-banking payment companies. The rules, issued by China’s State Council, impose stricter licensing rules and call for greater risk management of these platforms to guard against misappropriation of funds and financial crimes, Reuters reported Sunday (Dec. 17).
Per the report, the regulations also say companies must bolster their information protection capabilities, clearly label prices for their services and charge “reasonable” fees. They also increase “the degree of punishment for serious violations.”
In addition, a statement from the council says that in cases of violations, the People’s Bank of China would impose “fines, restrictions on some payment operations, or order them to suspend business for rectification, up to the revocation of their payment business licenses.”
The new rules come as “regulators are tightening their collective gaze on the risks of non-bank firms,” as PYMNTS wrote last week. For example, last month, the U.S. Treasury Department’s Financial Stability Oversight Council (FSOC) announced it had adopted a new analytic framework for financial stability risks and updated guidance for non-bank financial company determinations.
“Financial stability is a public good, and we need a robust structure to monitor and address the build-up of risks that could threaten the financial system,” Secretary of the Treasury Janet Yellen said in a news release.
“Establishing an analytic framework and a durable process for the council’s use of its designation authority will strengthen our ability to mitigate the risks of financial crises that can devastate businesses and households.”
According to the FSOC, the framework provides “a detailed public explanation of how the council monitors, assesses, and responds to potential risks to financial stability, whether they come from widely conducted activities or from individual firms.”
Meanwhile, FDIC Chairman Martin J. Gruenberg discussed the risks of such entities during a speech in September, saying that “bank-like services operated outside the regulated banking environment, such as those just described, can pose opaque risks and interconnectedness that could adversely affect the safety-and-soundness of banks or result in consumer harm.”
And the Reserve Bank of India, that country’s central bank and banking regulator, recently tightened its lending rules for non-banks last month after seeing a surge of smaller loans and an increase in delinquencies.
Link: https://www.pymnts.com/news/regulation/2023/china-gets-tough-on-non-bank-payment-providers/
Source: https://www.pymnts.com
