On May 4 2018 the China Banking Regulatory Commission (CBRC) issued the Circular on Matters concerning Regulating Private Lending and Maintaining Economic and Financial Order (10/2018), which came into effect on the same date. Officials of the relevant government agencies also held a press conference to answer reporters' questions on the circular.

The circular was formulated in accordance with:

  • the Banking Regulation Law;
  • the Law on Commercial Banks;
  • the Criminal Law; and
  • the Measures for the Clampdown of Illegal Financial Institutions and Illegal Financial Operations.

The circular establishes the basis for clarifying credit rules and prohibiting illegal private lending.

Key aspects

Violent debt collection targeted Officials stressed that the circular is mainly directed at the increased level of violent debt collection, which affects not only private lending, but also car and housing mortgages, cash loans and campus loans in the field of internet finance.

Loan qualifications clarified The circular declares that without government approval, no company or individual can establish an agency that:

  • mainly issues loans; or
  • issues loans as part of its daily business activities.

Lenders' funds limited A private lender's funds must be its own and come from legal income. Lenders cannot absorb other parties' funds for lending or do so in a disguised form. The circular also expresses that private lending disputes will be handled in accordance with the Provisions of the Supreme People's Court on Several Issues concerning the Application of Law in the Trial of Private Lending Cases.

Illegal loan lending activities specified Under the circular, the following activities constitute illegal loan lending activities:

  • illegally accepting deposits from the general public or doing so in a disguised form in order to issue loans;
  • collecting loans by illegal means, such as:
    • intentional injury;
    • illegal detention;
    • insult;
    • intimidation;
    • threats; or
    • harassment;
  • fraudulently obtaining credit funds from a banking institution and transferring them to another at usury;
  • illegally distributing campus loans to school students, issuing non-designated loans or pretending to provide services and sell goods, but actually issuing loans and charging high interest (expenses); and
  • in the case of employees of banking financial institutions, carrying out organised private lending as major members or controllers.


According to the government officials at the press conference, the circular will be implemented in three stages.

First, lending institutions and funding agencies – including banking financial institutions and microfinance companies approved by the government – must:

  • operate in compliance with the laws and regulations;
  • strengthen service awareness; and
  • develop diverse credit products for different groups to increase support for the real economy.

Further, local governments and relevant departments must strengthen coordination and perform duties according to the law.

Lastly, the officials stressed that banking supervision institutions must promptly:

  • publicise typical cases;
  • strengthen risk warnings; and
  • increase public awareness of risk prevention.

For further information on this topic please contact Wu Jiejiang at Jingtian & Gongcheng by telephone (+86 10 5809 1000) or email ( The Jingtian & Gongcheng website can be accessed at

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