Baihang was established as a supplement to the state-run personal credit database, which covers 300 of 800 million potential borrowers
Hexindai (NASDAQ:HX) announced on Wednesday (January 23) that it has started sharing credit data with Baihang Zhenxin (Baihang Credit), the credit bureau that received the first credit checking license from the Chinese government.
The consumer lending marketplace company will make regular transfer of credit information to Baihang Credit and will process the data designed to provide credit statistics of an individual.
The data, which is generated from Baihang Credit, will be used by Hexindai to determine a borrower’s creditworthiness, thereby reducing the overall risks in its system.
“Baihang Credit’s platform will greatly enhance our credit services and strengthen compliance,” Xinming Zhou, CEO of Hexindai, said in the release.
Established by the National Internet Finance Association of China (NIFA) and eight privately-owned Chinese companies, Baihang Credit’s services include establishing and generating credit reports and credit information.
“I believe being one of the institutions to share credit data with Baihang Credit is recognition of our leading position in the industry, diversified customer base, high-quality data, transparent operations, and regulatory compliance,” Zhou said.
The eight companies that established the credit bureau in conjunction with NIFA include: Sesame Credit, which is developed by Ant Financial, an affiliate of Alibaba (NASDAQ:BABA) and Tencent Credit (HKEX:0700).
Kaola Credit, Pengyuan Credit, Sinoway Credit, Qianhai Credit Service, China Chengxin Credit and Intellicredit are the other companies behind Baihang Credit.
Hexindai urged that borrowers are now required to exercise caution when accepting loans as the cost of default would affect their credit record due to the integrated individual credit information available.
The People’s Bank of China accepted its application for Baihang Credit in January 2018 and gave a three-year license in February. The credit bureau was established in a bid prevent systematic financial risks in China, which the country believes is the new path for “improving the quality of economic development.”
Baihang Credit at the time of launch had a registered capital of 1 billion yuan (US$150 million), with NIFA being the largest shareholder with a 36 percent stake. The eight private companies each reported to have an eight percent interest.
The credit bureau’s database is supplementary to the state-run personal credit database which is said to cover only 300 million people out of around 800 million potential borrowers.
Following the announcement, shares of Hexindai were down 1.48 percent to close the trading session on Wednesday at US$2.67. The stock has a “Sell” ranking on TradingView with 16 verticals against, seven in neutral and five in favor.
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Securities Disclosure: I, Bala Yogesh, hold no direct investment interest in any company mentioned in this article.