China's banking regulator set to expand loans facilities to include retail purchases

By Marc Castro

Sep 26, 2013 12:54 PM EDT

The Chinese banking regulator announced last Thursday that was planning to allow non-financial companies to set up consumer finance firms. This is part of an effort to bring more private capital infused into the local financial sector.

The China Banking Regulatory Commission had said it sought public opinion as to the plan to allow non-financial companies having CNY30 billion or USD4,9 billion in annual revenues to form a consumer finance firm that would offer loans for the purchase of retail goods and services.

The proposed plan did not discount the idea that state companies would participate in this new line of business. The goal, as clearly stated by the regulatory authorities, is to bring in more private capital into the economy.

As of late, China had tried to let private investors take on a larger role in the state-dominated financial sector. Unfortunately, success has been few and fleeting. The current system allowed private firms to set up finance companies but only for the purpose of providing loans for businesses.

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