All online lending platforms have been banned from offering loans at Chinese universities, an official from the Ministry of Education (MOE) was quoted as saying in media reports on Wednesday.
Commercial banks, meanwhile, are being encouraged to provide small loans to college students, Zhao Jianjun, vice director of the finance department of the MOE, told a press briefing on Wednesday, according to the website of the MOE.
Some companies that have been lending to students said the regulation will help tackle social problems generated by soaring student debts.
These debts have led to a number of well-publicized incidents. For example, some Internet lenders in China are reportedly coercing female college students to provide nude pictures of themselves as collateral for loans, media reported. Besides, violent debt collection practices have occurred in some campus lending cases.
Authorities have cracking down on illegal behavior related to Internet lending in universities since the beginning of this year, an industry source close to the matter told the Global Times on Wednesday. He preferred not to be identified as he works for an Internet-based peer-to-peer (P2P) platform and he is not allowed to speak to the press.
"The central government has noticed those unsavory incidents related to campus lending, but the root cause of the problem is that commercial banks rarely lend to students, and their absence from the market created room for Internet lending platforms to grow," he said.
The market for Internet-based student loans should be further regulated, according to a document jointly released by the China Banking Regulatory Commission, the MOE and the Ministry of Human Resources and Social Security in June.
It's unclear exactly which lenders are covered by the latest regulation, industry expert Lu Zhenwang told the Global Times on Wednesday. "Internet lending services have different formats. Some [platforms] are like Alibaba's Huabei, which grants consumers small loans. Whether such lenders should be covered under this regulation is a question," he said.
An online lending services provider said its platform, which offers credit that can be repaid over a scheduled period, is not an Internet lending services platform but an e-commerce entity.
"We are not an entity that grants loans directly; we work with commercial banks that are the actual lenders," a public relations representative of the company who refused to be identified told the Global Times on Wednesday.
With the government curbing Internet loans to students, some platforms have restricted their business, the source said, while others "have strengthened their work with commerc