China bans prepaid card provider, warns non-bank financial firms
China’s central bank on Thursday said it had revoked the license of a prepaid card provider and vowed to crack down on non-bank financial institutions that violated the law.
The People’s Bank of China (PBOC) said on its website it had ordered Shanghai Chang Gou Enterprise Services to withdraw from the market after finding the company had misappropriated clients’ money, concealed capital flows, and refused inspections.
It said police were now dealing with the firms’ bosses and its debts were being handled by Bank of Communications International Trust (601328.SS)(3328.HK).
The PBOC said it would resolutely clean up and severely deal with “non-bank payment institutions that are challenging legal boundaries, misappropriating client reserves, damaging customer interests and undermining market order”.
A growing number of non-bank financial institutions have failed in recent months, highlighting the risks emerging in a fast-growing sector whose players are able to operate beyond the scrutiny of China’s regulators.
Chang Gou issued pre-paid payment cards which customers could use at over 20,000 retailers, including supermarkets Tesco and Lotus in areas such as Jiangsu and Zhejiang provinces, it said on its website.
In a statement dated Monday, the company said it was under investigation and would stop all operations.
Source: Reuters – China bans prepaid card provider, warns non-bank financial firms
