BEIJING (Reuters) – China Rapid Finance will make any adjustments needed to its business practices and the fees it charges in response to Bejing’s new requirements to clean up fast-growing online micro-lenders, its chief executive Zane Wang said on Monday.
Online micro-lenders have come under scrutiny as “problems such as over-lending, repeat borrowing, improper collection, abnormally high interest rates, and privacy violations have become prominent”, Chinese financial regulators said last week.
Wang told Reuters in a telephone interview he remains positive about the broader market and that China Rapid Finance is well-positioned to benefit from a market cleanup of online microlending in China, which dwarfs that for the rest of the world combined and includes thousands of players..
“The only thing that changed is in the short-term some companies might run into some difficulties,” Wang said.
“The market might need some clean-up, maybe some shake-up in terms of some companies might have to exit the market, some might have to reposition themselves,” he added.
China Rapid Finance, which floated on the New York Stock Exchange in April, has to-date been fully compliant with regulations and is in close contact with local government authorities about specific new rules, Wang said.
Shares in the company fell by nearly 20 percent on Friday following the publishing of the notice from regulators, and on Monday were trading down more than 5 percent.
The guidelines said that all-in rates charged on loans, including fees, must comply with China’s legal cap on interest rates, which goes further than current rules which only apply to the actual annualized interest rate on loans, Wang said.
“We are working with the authorities on how to define what kind of fees (are included). So we need to get some further clarification from local authorities,” Wang said, adding that his firm’s fees are roughly in line with what credit card companies charge for cash advances.
“Going forward, we should be able to take advantage of the huge market opportunities and also benefit from a clean, healthy, market environment”, Wang said.
Reporting by Elias Glenn; editing by Alexander Smith