Guo Shuqing, head of the China Banking and Insurance Regulatory Commission (CBIRC), was speaking at a news conference on Tuesday.

Chinese financial technology companies (fintechs) such as micro-lenders, consumer finance firms, and digital banks have only two years to shore up their capital in line with regulatory requirements. Guo Shuqing, head of the China Banking and Insurance Regulatory Commission (CBIRC), said these entities would be treated on the same footing as other financial institutions in this regard. (Reuters)

The regulatory crackdown on fintechs

Chinese fintechs have been facing a regulatory glare ever since the unfortunate cancellation of the massive $ 35 billion IPO by the Ant Group in November last year.

Regulators pulled the rug from under the IPO at the last minute by proposing crucial regulatory changes applicable to fintechs such as Ant.

The changes include tighter rules on loan issuing, with internet platforms required to fund a minimum of 30% of co-lending partnership loans. The CBIRC will also cap how much capital commercial banks can commit to online lending in co-operation with tech platforms.

The changes forced Ant to propose a change in its structure that would ultimately make it a financial holding company.

Chinese regulators also hauled up Alibaba and Ant on anti-trust issues.

Capital adequacy a must says Guo

“Starting a business needs capital so does starting a financial business,” Guo said at the news conference. “As long as Internet platforms conduct financial operations, the requirement of capital adequacy ratio on them should be the same as other financial institutions.”

Guo also clarified that there would be no restrictions on the development of financial businesses by the Ant Group. However, Ant would have to comply with all regulations.

“But by a maximum of two years, (the capital adequacy of) all platforms should be back on track,” Guo stipulated.

Jack Ma no longer China’s richest person

According to a Business Insider report, Jack Ma no longer holds the distinction of being China’s richest person.

He has dropped to fourth place after a regulatory crackdown crimped valuations of his business holdings

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Image of Guo Shuqing: Wikimedia Commons