(PBOC), which is reportedly considering setting up a credit management bureau within its structure and, more to the frustration of credit management firms, has drafted a credit management regulation they say is likely to lead to a monopoly.
Insiders say the regulation, which was completed last year, requires credit management companies to have a minimum of 100 million yuan (US$12 million) in registered capital, a threshold none of China's some 500 credit management firms, most of them privately-owned, can presently meet.
"It's unfair," said a manager at a private credit management firm. "We've been in the business for 10 years but we don't see why we need that much registered capital."
Some media reports said the PBOC was putting together a credit management firm with investment from the four largest state-owned commercial banks, which would presumably have no problem meeting the capital requirement.
And the new firm will likely be given enviable access to what is said to be China's largest credit information database, covering more than 300 cities, which the central bank has built up over the years.
A PBOC official declined to comment, but reiterated earlier statements that it is building an "enterprise and individual credit management system."
Analysts say a social credit system is badly needed in China where debt defaults are commonplace and many companies have a "give-me-a-good-rating-and-tell-me-how-much-you-want" attitude towards credit rating firms.
And legislation is currently the most urgent task, as China still has no law specifically governing credit management issues.
It is crucial to the development of consumer credit and account sales,which make a growing contribution to economic growth, said Pu Xiaolei, deputy director of the Credit Management Department under the Chinese Academy of International Trade and Economic Cooperation -- the Ministry of Commerce's think tank.
(China Daily August 4, 2003)
