Chinese financial regulators have unveiled a new set of rules to better regulate the country’s credit card business. 

The new set of rules have been jointly issued by the China Banking and Insurance Regulatory Commission (CBIRC) and the People’s Bank of China. 

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In recent years, the credit card business in China has developed rapidly and has played a crucial role in facilitating the payment and daily consumption of the masses, CBIRC said in a statement. 

However, certain business practices including lack of service awareness, inadequate risk management and control have hurt customers’ interests, it added. 

The new rules aim to address these issues by taking steps such as strengthening the operation and management of credit card business, regulating the marketing of card issuance and increasing the supervision and management of credit card business among several others.

Based on the central bank’s data as of the end of 2021, banks in China have issued a total of 800 million credit cards with outstanding loans valued at CNY8.62 trillion ($1.29 trillion). 

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Around 1% or CNY86bn of the total outstanding loans are overdue for six months or longer.

Among others, the new rules bar banks from using the number of cards issued or market share as the main performance indicator. 

They are also required to limit the number of dormant cards to 20% of the total and if the number of non-active cards exceeds the cap, the bank shall not issue new cards.

Furthermore, the banks are required to tighten scrutiny over credit card loans, strengthen risk management control, and set up a system to monitor, identify, alert and prevent abuse in the credit card business. 

Last month, the Chinese central bank joined forces with Bank for International Settlements to create a Renminbi Liquidity Arrangement (RMBLA).