Micro lenders banned from granting loans to college students

China has banned micro lenders from granting consumer loans to college students, the country's top banking regulator said on Wednesday.

A statement jointly issued by the China Banking and Insurance Regulatory Commission, the People's Bank of China, the Central Cyberspace Affairs Office, the Ministry of Education and the Ministry of Public Security, said some micro lenders have targeted university campuses and issued online consumer loans via cooperation with technology companies.

The practices have caused some students to overspend and fall into debt traps.

The statement also said micro lenders should strengthen identity verification of clients and not make college students their target clients for online consumer loans or carry out targeted marketing aimed at them.

They should also gradually reduce existing loans to students. Institutions without financial licenses should not offer credit services to college students, the statement said.

Banks should make sure college students have a second source of debt repayment and obtain written statements from them that they approve the loan and are willing to pay it for the students, it added.