China's proposed tighter regulations for leasing companies are credit positive, Moody's said Jan. 13.
Earlier in January, the China Banking and Insurance Regulatory Commission, or CBIRC, issued a consultation paper on strengthening regulations for leasing companies that were previously regulated by the Ministry of Commerce.
The proposed new rules set out the business scope of leasing companies and require that their leasing assets should be no less than 60% of their total assets.
The rating agency said the new measures will also strengthen capital adequacy requirements for such companies. This will push companies to adopt more prudent capital management and, in some cases, seek capital injections, which is also credit positive.
In addition, the new rules propose the same thresholds for concentration risk for both commercial and financial leasing companies.
The CBIRC took over the role of regulator for commercial leasing companies from the Ministry of Commerce in April 2018.