2002120 February, on the website of China Banking Regulatory Commission, China issued the Notice on Further Regulating the Internet Loan Business of Commercial Banks, and the supervision of Internet loans was upgraded, adding "three red lines" quantitative indicators:

1. The contribution ratio of partners in a single loan shall not be less than 30%.

Strengthen the management of capital contribution ratio. Where a commercial bank and a cooperative institution jointly contribute to the issuance of Internet loans, it shall strictly implement the requirements for the management of the proportion of investment, and the proportion of investment of the partners in a single loan shall not be less than 30%.

2. The loan balance of the Bank to a single partner shall not exceed 25% of the Bank's net Tier 1 capital.

Strengthen the centralized management of cooperative institutions. Where a commercial bank and a cooperative institution jointly contribute to the issuance of Internet loans, the balance of loans granted by the Bank to a single partner (including its related parties) shall not exceed 25% of the Bank's net Tier 1 capital.

3. The loan balance shall not exceed 50% of the total bank loan balance.

Implement total control and quota management. The balance of Internet loans jointly funded by commercial banks and all cooperative institutions shall not exceed 50% of the total loan balance of the Bank. "Less than 50%" is the quota index of most commercial banks at present, that is, this index reserves a certain space for commercial banks to further develop Internet loans and avoids commercial banks from relying too much on cooperative institutions to develop Internet loan business.

Purpose of the Three Red Lines The original intention of setting up the "Three Red Lines" in the Notice of China Banking Regulatory Commission on Further Regulating the Internet Loan Business of Commercial Banks is to require commercial banks to strengthen the main responsibility of risk control and independently complete the risk control links that have an important impact on loan risk assessment and risk control. It is strictly forbidden to outsource key links and independently carry out online loan risk management. Further standardize the online loan business and control the overall risk of domestic online loans.

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