With the strengthening of regulatory policies, the number of microloan companies is continuously decreasing. This year, financial management bureaus in various regions have announced the termination of operations for microloan companies, exiting the industry. In April, three departments issued the "Notice on Further Strengthening the Supervision of Local Financial Organizations," which requires a reduction in the categories and total number of local financial organizations, with no increase. For industries with an excess of institutions, efforts continue to be made to reduce the existing stock.

According to data from the People's Bank of China compiled by Yicai, currently, there are 3,523 fewer microloan companies nationwide compared to the peak period, which is a sharp decrease of 40% over 10 years, with more than 350 companies disappearing each year.

Exits are underway

Recently, financial regulatory authorities in various regions have announced the situation of microloan institutions within their jurisdictions, with a batch of microloan institutions either being cleaned up or voluntarily exiting the industry.

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In August, the Hubei Provincial Financial Management Bureau announced its consent for two microloan companies to exit the microloan industry by dissolution; in July, it announced that three microloan companies exited the industry by changing their names and business scopes; in June, six microloan companies exited the industry.

In July, the Henan Provincial Financial Management Bureau revoked the pilot qualification of one microloan company, which will no longer be allowed to engage in microloan-related business activities. The Guangdong Provincial Financial Management Bureau agreed to the cancellation of the microloan business pilot qualification for one microloan company.

On August 19, the Jiangxi Provincial Financial Management Bureau revoked the pilot qualification of one microloan company, which can continue to retain its market entity status and legally collect existing loans, but its company name must not contain the words "microloan" or "microloan company," and its business scope must not include "operating microloan business." If new loan business occurs, it will be treated as illegally issuing loans.

The Hainan Provincial Financial Management Bureau conducted a comprehensive review and inspection of market entities within its jurisdiction that do not have microloan business qualifications and published a related list in June, requiring these entities to apply for changes in name and business scope registration or to handle deregistration in a timely manner. The list shows: there are 47 companies within the jurisdiction whose names include the words "microloan" but lack business qualifications; there are 92 companies whose business scopes include the words "microloan" but lack business qualifications.

In addition to the local financial regulatory authorities' cleanup and rectification efforts, some central enterprises are also continuously selling their microloan licenses under the requirements of the "exit finance order."On July 22, China Telecom's subsidiary, Tianyi E-Commerce Co., Ltd., listed for transfer at the Beijing Property Exchange a 41.18% stake in Chongqing Zhong'an Small Loan Co., Ltd.; on August 7, Poly South Group Co., Ltd. and Poly Investment Holdings Co., Ltd. jointly listed for transfer at the Guangzhou Property Exchange the 100% equity of Poly Microloan.

In July, the Jiangsu Provincial Financial Supervision and Administration Bureau approved the termination of Nanjing Bangxin Technology Microloan's related business qualifications. The controlling shareholder of Nanjing Bangxin Technology Microloan, Dongfang Bangxin Rongtong Holdings Co., Ltd., is a subsidiary of Oriental Assets. It is understood that at its peak, Oriental Assets once controlled more than 20 microloan companies, hence being referred to as "China's largest microloan" company.

According to Tianyancha: In addition to Nanjing Bangxin, Dongfang Bangxin Rongtong has successively canceled nine microloan licenses and transferred seven microloan companies. To date, there are very few microloan companies left under Oriental Assets.

The number continues to compress.

Data from the central bank shows that, as of the end of June 2024, there were 5,428 microloan companies nationwide, 72 fewer than at the beginning of the year. The loan balance was 758.1 billion yuan, with a reduction of 10 billion yuan in the first half of the year.

From 2014 to 2018, the number of microloan companies rapidly expanded, maintaining over 8,000 for five consecutive years, with 2015 reaching its peak, with a total of 8,951 microloan companies nationwide as of the end of June that year.

This means that over the past 10 years (from June 2015 to June 2024), a total of 3,523 microloan companies have been cleared out, equivalent to an average reduction of more than 350 companies per year.

The number of employees in the industry has also decreased from 114,000 in June 2015 to 47,000 in 2024, with 67,000 people leaving the microloan industry over the past decade.

"In the early years, microloan companies, as a supplement to traditional financial institutions, developed rapidly against the backdrop of rapid economic growth. Now, with the strengthening of regulatory policies, the microloan industry continues to clear out, either through transfer, clearance, or cancellation, accelerating the process of survival of the fittest," said an industry insider to the reporter.

As the "capital of microloans," Chongqing has always been far ahead of other regions in loan balance. As of the first half of 2022, the loan balance of 245 microloan companies in Chongqing was as high as 258.145 billion yuan.In 2023, with the exit of several leading micro-lending companies such as Chongqing Ant Shangcheng Microloan and Chongqing Ant Microloan, the loan balance in the micro-lending industry within the jurisdiction has shrunk significantly. As of the first half of this year, the number of micro-lending companies in Chongqing has been reduced to 228, with the loan balance plummeting by 50% to 108.744 billion yuan.

At present, Jiangsu Province has the highest number of micro-lending companies, reaching 575, followed closely by Guangdong with 428. All other provincial-level administrative regions have not exceeded 400.

While the existing stock continues to be phased out, the increase has also become increasingly difficult. The industry insider mentioned that the "Notice on Further Strengthening the Supervision of Local Financial Institutions" issued by three departments in April this year requires a reduction, not an increase, in the categories and total number of local financial institutions. For industries with an excess of institutional numbers, efforts will continue to reduce the existing stock.

"That is to say, financial regulatory authorities may no longer approve micro-lending licenses in the future, and the prices of high-quality micro-lending licenses in key areas or scarce internet micro-lending licenses may also rise accordingly," said the industry insider.

For instance, Poly Microloan holds an internet micro-lending license, and the base price for the transfer of its 200 million shares has reached 280 million yuan.

On the other hand, some ordinary local micro-lending licenses with poor performance have been neglected. According to media reports, 20% of the shares of Shijin Microloan, which were listed on the Beijing Property Exchange in the first half of this year, have been heavily discounted from 500,000 yuan to 350,000 yuan, and then to 200,000 yuan.