The People's Bank of China, China's central bank, has issued draft rules on auto loans, a growing sector expected to give China's fast-accelerating car market a major boost.
The new regulations restrict the loan period to five years with maximum outlay of 80 percent of the auto price, excluding taxes and insurance, the central bank said on its website.
Last month the China Banking Regulatory Commission gave the green light to General Motors Corp., Toyota Motor Corp. and Volkswagen AG to start offering car loans.
The three car giants are expected to set up auto-financing operations in China in about six months' time, the commission said.
Auto loans are forecast to increase by 80 billion yuan (US$9.6 billion) in 2003, up 71.6 billion yuan year-on-year from last year, according to a government report issued by the State Development and Reform Commission.
Over 100 billion yuan in loans were issued in 2002, according to state estimates, with China's big four banks -- China Construction Bank, Bank of China, Industrial and Commercial Bank of China and Agricultural Bank of China, controlling 90 percent of the market.
The rules also provide regulatory guidelines for personal auto loans, distributor auto loans, group auto loans and risk management, the report said.
(China Daily January 22, 2004)