China’s efforts to curb predatory lending to the country’s small and medium-sized enterprises could harm the sector rather than helping it by cutting off access to crucial finance, analysts have warned.
Multiple shadow banking lenders have told the Financial Times they would stop servicing medium to high-risk borrowers after the Supreme Court announced a plan last month to “significantly” cut the interest rate shadow banks could charge.
The figure could fall to as low as 15 per cent a year from 24 per cent, affecting nearly Rmb7tn ($1tn) in outstanding loans, according to people involved in developing the rules.
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