China’s First Centralized Online Personal Credit Database Takes Shape

A new company led by the National Internet Finance Association of China has submitted an application to the central bank for a license to operate the country’s first centralized database on online personal credit.

The People’s Bank of China announced the application submission on Thursday.

The database would help internet finance firms and commercial banks better analyze consumers’ credit histories before they extend loans. Calls for a centralized system became increasingly urgent after online lenders complained consumers often borrow from multiple platforms to roll over debt without the lenders’ knowledge.

The company would focus on collecting data from outside traditional financial institutions to complement the central bank’s own credit reporting platform.

Caixin has learned the personal credit information on the proposed platform would come primarily from online microlenders and peer-to-peer lending platforms, as well as consumer loans firms, with the goal of improving data sharing within the industry.

The National Internet Finance Association of China, a self-governed industry association, would hold a 36% stake in the new company. The rest would be divided evenly between eight private companies: Zhima Credit, Tencent Credit Services, Shenzhen Qianhai Credit, Pengyuan Credit, China Chengxin Credit, Koala Credit, Intellicredit, and Sinoway Credit. The company would have a registered capital of 1 billion yuan ($154 million).

Globally, there are many examples of independent credit information reporting platforms led by industry associations rather than companies or financial institutions, said Lai Jinchang, lead financial sector specialist at the International Finance Centre in the East Asia and Pacific Region. Regulators should not stop at just this one system and should work to create specialized credit reporting agencies next, Lai said.

Contact reporter Liu Xiao (liuxiao@caixin.com)