Predatory loan sharks are continuing to target Chinese university students, six months after authorities launched a national crackdown against the unscrupulous lenders, mainland media reported.
China banned online lenders from extending credit to university students in June, permitting a limited number of authorised banks to issue loans. Other online lenders were asked to withdraw from the business, according to a joint notice from the China Banking Regulatory Commission, the Ministry of Education and the Ministry of Human Resources and Social Security.
State-run China Central Television reported on Monday, however, that predatory lending was still flourishing on campuses. It said Dtxindai, a Shanghai-based consumer loan company, was found lending money to students through ads it had posted around university grounds, charging an extremely high annual interest rate of as much as 76 per cent.
A staff member told CCTV that the company originally targeted customers online but shifted to posting ads inside campuses after the crackdown was imposed.
Yiqianbao, an app developed by Qingdao Chengyang District Zhonghui Micro Loan Co Limited, was found to charge 7,899 yuan (HK$9,485) for a one-year loan on an original investment of 5,000 yuan, reflecting an annual interest rate of about 58 per cent.
A university student in Nanchang in southeastern China’s Jiangxi province and identified only as Xiaosheng, borrowed 2,000 yuan from an unnamed loan shark in 2016 to repay a classmate who lent him money to invest in the stock market, according to the CCTV report.
When Xiaosheng wanted to recover his losses in the stock market, he borrowed from more loan sharks. In less than two years, he borrowed from more than 90 loan sharks, some of whom charged an annual interest rate of as much as 2,000 per cent. He has since incurred a debt of 300,000 yuan, the report said.
Xiaosheng’s inability to repay his lenders ultimately affected his parents.
“I receive nearly 20 to 30 calls every day, asking us to pay back,” CCTV quoted Xiaosheng’s father as saying. “Besides this, we even received derogatory texts and obscene photos.
“I would help my son to pay back, but I refuse to pay an illegal amount not endorsed by Chinese law,” the father said.
Under Chinese law, loans that carry an annual interest rate of more than 24 per cent are illegal, the South China Morning Post reported in July.
Chinese authorities imposed tight restrictions on loan firms targeting university students in the wake of the public’s outrage over reports of young people falling victim to loan sharks charging exorbitant rates.
In the past, some female students were forced to provide naked pictures of themselves – in some instances as they held up their identity cards – to loan sharks as a form of collateral, according to mainland media.
Some of those images were leaked online. Some female students reportedly were forced into prostitution after failing to repay their debts.
This article Loan sharks continue to prey on Chinese university students by going offline to bypass crackdown first appeared on South China Morning Post