SHANGHAI, Jan 24 (Reuters) - China’s central bank is setting up a personal credit reporting agency that would have a strong focus on providing information protection, state newspaper People’s Daily reported on Wednesday citing its vice governor.
The agency was needed as the country’s existing centralised credit scoring system only contained personal debt information held by traditional financial institutions, Chen Yulu told the newspaper.
“At present the People’s Bank of China is cautiously and strictly setting up a market-based personal credit reporting agency,” he said.
Although China in 2015 allowed eight firms including Alibaba’s Ant Financial and Tencent Holdings to develop credit scoring systems, state support for such plans has waned amid fears that the initiatives may threaten data security and create conflicts of interest.
Chen said information sharing was central to the industry and the regulator was working to supervise information collection and to ensure that limits would be placed on the use of such information.
The government believed that a modern economic financial system had to be based on a sound social credit system that would reward honesty and compliance as well as punish misconduct and dishonesty, he added.
China’s existing, centralized credit scoring system, the Credit Reference Center, only covers around 300 million people out of around 800 million potential borrowers, many of whom borrow from private firms like Ant Financial’s Sesame Credit.
That creates a blind spot of some half a billion borrowers beyond Beijing’s credit network. By contrast, almost all adults in the United States have a credit score. (Reporting by Brenda Goh; Editing by Edwina Gibbs)