SHANGHAI: Seeking new targets for investment, particularly taking over commercial banks’ non-performing assets (NPA), has become a pressing task for various e-finance platforms, reports Shanghai’s China Business News.
According to regulations, banks can sell bad loans to assets management companies at 20% to 30% the amount of the loan, a low threshold that provides a potentially enormous source of profit for these platforms and a means to diversify their business.
During recent years, with the opening of the market for the disposal of bad loans in China, several local asset management companies and financial asset exchanges are entering the relatively uncrowded market, according to the report.
E-finance operators, who have begun making inroads into various financial sectors since the beginning of this year, have expressed an interest in taking a share in the NPA market, said the report.
There are two online approaches for the disposal of bad loans: through an asset disposal platform on online auction website Taobao or through jucaicat.com, China’s first person to finance (P2F) NPA products transaction platform. Arrangements for the disposal of NPA must be made by authorized institutions, including the country’s four major assets management companies. Ordinary enterprises cannot be involved directly in the disposal of bad loans.
There are some business opportunities for exploration during the disposal process, given the numerous chains in the process and a long cyclical time period involved.For instance, the two online approaches were not meant to put the NPA online for sale, but allow the general public to get the benefits from the disposal of NPA through online channels or internet finance platforms.
