China opens 2 consumer finance firms to boost consumption
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China's first two consumer finance companies opened Monday in Beijing and the southwestern city of Chengdu as the ountry seeks to boost domestic demand to balance economic growth.
The two were Beiyin Consumer Finance Co., a wholly-owned subsidiary of the Bank of Beijing, and Sichuan Jincheng Consumer Finance Co., a joint venture between the Bank of Chengdu and the Malaysian lender Hong Leong Bank Bhd.
They will offers loans for purchasing durable goods, including home appliances, mobile phones, computers and furniture, and also for education, decoration, weddings, and travel. The firms do not need guarantees and security and do not provide mortgage and auto loans, according to statements.
They do not take deposits and the lending rates can be four times of the benchmark rates.
Beiyin Consumer Finance Co. has a registered capital of 300 million yuan (43.9 million U.S. dollars).
Beiyin Consumer Finance signed a collaboration deal with Beijing Dazhong Electronics Co. Monday to offer lending services at some stores of the electronic wholesaler.
Song Wenchang, deputy general manager of Beiyin Consumer Finance, said the firm had signed similar deals with rival electronics retailer Gome and Beijing Wangfujing Department Store.
Sichuan Jincheng Consumer Finance, 51 percent owned by the Bank of Chengdu, has a registered capital of 320 million yuan, according to general manager Ma Qirong.
The China Banking Regulatory Commission has also approved two consumer finance companies in Shanghai and the northern port city of Tianjin, as the government strives to reduce the country's heavy reliance on investment and exports for economic expansion.
Guo Tianyong, a professor of finance at the Central University of Finance and Economics in Beijing, said efficient lending in consumer finance was critical to expanding domestic demand and transforming the economic growth mode.
