Huabei is a consumer loan product from the Ant Group. Data from this loan product will be fed into the Financial Credit Information Database held by the People’s Bank of China (PBOC), Ant said in a statement Wednesday.
The information, including the date the account was opened, the amount of the credit line and the repayment status, will be provided to the central bank. Users will need to authorize it. Specific information such as details on time of purchases or goods purchased will not be transmitted to the PBOC.
Ant Group, which is controlled by Alibaba’s founding billionaire Jack Ma, saw its successful initial public offering suspended in November due to regulatory concerns.
Ant’s lending business operated on a model where it matched borrowers to lenders, such as banks, but the company did not guarantee these loans. Instead, the banks bore most of the risk.
Chinese regulators have ordered a restructuring of Ant Group. In June, the company was given the green light to operate a consumer credit business with outside shareholders. This company houses its Huabei and Jiebei loan products and is called Chongqing Ant Consumer Finance Co. Ant will have to take more of these loans.
Ant Group is currently in the process of becoming a financial holding company which will be overseen by the PBOC and other regulators.
Song of Aly | Reuters
Ant Group said some users can already search for Huabei-related records in their credit reports with the central bank.
The company seeks to allay fears that sharing of Huabei users’ credit data will affect their future ability to obtain loans.
“A complete and appropriate set of credit records will allow financial institutions to better understand the creditworthiness of users and to better serve them,” Ant Group said in a statement.
Kevin Kwek, managing director and senior analyst at Bernstein, said the credit data sharing deal with the central bank removes “significant” regulatory uncertainty around Ant Group.
“Data sharing of course erodes Ant’s advantage, but it allows them to gain regulatory blessings, such as obtaining a consumer credit license,” Kwek told CNBC.
“In my opinion, that means the intention is to allow Ant to continue in business, but within the framework of regulations and rules, and if that helps the larger agenda of the consumer credit bureaus.” It’s important to note that Ant will continue to be dominant as a very large distributor given its user base, although it now has to share some data. “