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China’s banks have been allowed to transfer bad personal loans in bulk by the end of this year, a new report says.
Sources told Reuters the country’s financial regulator made the decision as lenders grapple with rising consumer loan defaults and credit card delinquencies.
this State Financial Supervision and Administration Bureau The NFRA issued a notification allowing banks and asset managers to continue transferring and disposing of non-performing personal loans until the end of 2026, according to two sources. The program is expected to be completed by the end of 2025.
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The policy was first launched in 2021 and was initially limited to 6 state-owned banks and 12 joint-stock banks. Other lending institutions can handle non-performing personal loans through self-collection or write-off.
The program was expanded in late 2022 to include policy banks, some regional banks, trust companies and consumer finance companies.
Transfer to debt collection agency
The program allows banks to sell pools of non-performing personal loans to asset managers through official transfer platforms. Bank Credit Asset Registration and Transfer Center.
Asset management companies typically acquire distressed assets at a discount and try to recoup the funds through debt restructuring, asset sales or legal proceedings.
In compliance with regulatory requirements, transfers must follow a transparent due diligence and asset valuation process.
The move signals Beijing’s efforts to give banks more breathing room to deal with deteriorating asset quality amid a slowing, debt-hit economy Crisis in the real estate industry and Consumption downturn.
The nonperforming loan rate for personal loans, which account for about 30% of total loans from state-owned banks, has been rising. With profit margins at record lows, China’s banks have accelerated the disposal of bad loans.
The sources declined to be named because they were not authorized to speak to the media. The NFRA did not immediately respond to Reuters’ request for comment.
The Industrial and Commercial Bank of China (ICBC), the world’s largest commercial bank by assets, reported that as of the end of June, its personal consumer loan non-performing ratio rose to 2.51%, an increase of 0.12 percentage points from the end of 2024.
As of the end of June, the bank’s credit card delinquency rate reached 3.75%, a year-on-year increase of 0.25 percentage points.
In the first half of 2025, personal bad loan transfers under the program surged to 107.6 billion yuan, more than double the same period in 2024, according to the state-run Securities Times.
IKEA will close 7 Chinese stores
At the same time, relevant news reports stated that furniture retailer ikea The company said in a statement on Wednesday that it would close seven stores in China starting February 2.
Ikea said in a statement posted on its official WeChat account that the stores planned to close include one in the suburbs of Shanghai, another in Guangzhou, and several stores in second-tier Chinese cities such as Nantong, Xuzhou and Harbin.
Overall, retailers have been working hard to increase sales in China, with Consumer sentiment remains sluggish It comes after a long housing crisis and concerns about job security and stagnant wages.
IKEA currently has about 40 stores in mainland China, and the statement said that it has recently opened five new stores of different sizes.
China is the world’s second largest economy, accounting for approximately 3.5% of IKEA’s global sales. Ikea opened a new store on JD.com last August to help boost online sales as China’s flagship store accounts for an increasing proportion of sales online.
IKEA said in the statement, “We will shift from scale expansion to precise cultivation, focusing on Beijing and Shenzhen as the key markets, and open more than 10 small stores in the next two years.” It added that it is expected to open new stores in Dongguan and Beijing in the first half of 2026.
- Reuters Additional editing by Jim Pollard
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