Main Writer/Xie Jiu

Let's first look at what exactly is online microfinance? According to the official definition, the network microfinance business refers to the microfinance company using big data, cloud computing, mobile Internet and other technical means, the use of the Internet platform to accumulate the customer operation, network consumption, network transactions and other endogenous data information, as well as other data information obtained through legal channels, analyze and evaluate the credit risk of borrowing customers to determine the mode of lending and the amount of loan, and complete the online loan application, risk review, loan approval, loan issuance, and the loan application. The company's business is to analyze and evaluate the credit risk of the borrower to determine the type and amount of the loan, and to complete the process of loan application, risk review, loan approval, loan disbursement and loan recovery online.

It's easy to see that the network of small loans and traditional bank loans are very different. The main basis for traditional banks to issue loans is the customer's income and asset status, while the network of small loans mainly through big data to analyze the customer's credit risk, as the main basis for the issuance of loans. In the previous era of traditional credit, many customers with poor income, assets and cash flow status, it is difficult to obtain bank credit, but in the era of network microfinance, these people are more likely to obtain credit resources, but of course, also have to bear higher interest rates on loans.

In recent years, the domestic network of micro-credit high-speed development, from a positive point of view, the threshold of credit is greatly reduced, so that more people can enjoy the credit resources, and even in the short term to stimulate consumption, but at the same time also brings more potential risks. Zhou Xiaochuan, former governor of the central bank, recently said that the savings rate of the younger generation is now significantly lower, which has a good side, is conducive to expanding domestic demand, but there is also a worrying side, some young people rely too much on borrowing to overconsumption, luxury consumption, in the future is not a good thing is not yet fully known.

For a long time, China has been facing the plague of over-saving and under-consumption, and has been working hard to transform itself into a consumer economy, and now there is suddenly a generation of young people who dare to consume, which seems to mean that China's economy can finally become a consumer-driven economy like the developed economies. But in fact, the model of relying on this generation of young people to stimulate consumption is not sustainable, because young people's income level is not high now, and there is also greater pressure on the level of pension security in the future, so this generation of young people borrowing large sums of money to consume not only to make their own old age in the future, and will even bring greater risks to the Chinese financial system.

The threshold for online microfinance is now beyond imagination. In the past traditional credit era, a person who joined the workforce wants to do a credit card is not an easy thing, but now, a college student without income can easily borrow money through a variety of online lending platforms, and the interest rates of these online lending platforms are relatively high, and once you can't pay back the money, you'll be caught in the trap of the interest rate. In recent years, the domestic repeated outbreaks of female college students "naked loan" events, has sounded the alarm for the industry, if not in time to regulate the industry, will not only bring tragedy to more individuals, but also to the domestic financial security to bring a greater impact. When the U.S. subprime mortgage crisis, it is because the people with insufficient income to obtain too much credit, and these loans are excessive asset securitization caused. Today's network of small loans, the same is also a large number of put to the lower income groups, also involves a greater degree of asset securitization.

So what are the key changes in this reform on online microfinance?

First, the requirement that "microfinance companies operating network microfinance business should be carried out mainly in the provincial administrative region of the registered place; without the approval of the State Council banking supervision and management institutions, microfinance companies may not carry out network microfinance business across provincial administrative regions. At present, the network credit platform is basically cross-regional business, if in accordance with the new approach, these companies can only significantly shrink the scope of business, can only be confined to the place of registration.

The new reform method also stipulates that "the number of the same investor and its related parties, concerted action person as the main shareholder participating in the cross-provincial administrative region operating network microfinance business microfinance company shall not exceed two, or the number of holding cross-provincial administrative region operating network microfinance business microfinance company shall not exceed one. " Participation can not be more than 2, holding can not be more than 1, to the ant group, the holding of the chanting and lending are registered in Chongqing, under the new rules may only have 1 can operate across provinces. The new regulations require: "Without the approval of the State Council Banking Supervision and Administration Agency has been engaged in the network of small loan business across the provincial administrative regions of the microfinance companies, should be in the transition period provided for in this approach to fully meet the requirements of the provisions of this approach; overdue still does not comply with the provisions of this approach, shall not be across the provincial administrative regions to carry out the new network of microfinance business. "

The new regulations also impose strict limits on the loan amount of online microfinance: "The balance of a single-family online microfinance loan to a natural person shall in principle not exceed RMB 300,000, and shall not exceed one-third of the average annual income of the person for the last three years, and the lesser of these two amounts shall be the maximum limit of the loan amount; and the balance of a single-family online microfinance loan to a legal person or other organization and its affiliates microfinance loan balance shall not exceed RMB 1 million in principle." Online microfinance companies are also required to review the borrower's income level, overall indebtedness, asset status, and other factors, so that the borrower's repayment amount per installment does not exceed his or her ability to repay. This is vastly different from the previous credit model of online microfinance companies.

The new regulations also strictly limit the leverage capacity of online microfinance companies, requiring that "in a single joint loan, the capital contribution ratio of the microfinance company operating the online microfinance business shall not be less than 30%". Many of the loans of the network microfinance companies, in fact, and traditional banks to complete the joint network platform to provide customers with big data, the actual loan issuance of most of the traditional bank through the completion of the network platform's actual contribution ratio of many less than 5%, in the new regulations under the requirement of 30%, the leverage of the network lending company has been greatly compressed, and the scale of the operation will also be greatly reduced.

From the point of view of the new regulations issued by the regulator, it can be said that the domestic online lending industry has entered a brand new era, and the business model of the relevant companies will also undergo drastic changes. For China's economy, financial innovation is of course very important, but if innovation threatens financial security, it is clear which is more important.