Chinese non-state-owned consumer credit bureau Baihang Credit Bureau Co. Ltd. obtaining a license to operate as a consumer credit information business is credit positive for Chinese banks, Moody's said.
The rating agency said March 1 that the move is credit positive for Chinese banks that originate consumer loans and asset-backed securities backed by consumer loans because Baihang Credit Bureau will utilize nonbank consumer behavior data to source its consumer credit information.
Banks and structured finance sponsors can use the consumer credit information to enhance the quality of their consumer loan portfolio with more refined underwriting, structuring and monitoring.
The Chinese central bank granted Baihang Credit Bureau a license to operate as a consumer credit information business through Jan. 31, 2021.
The company will complement the Chinese government's existing consumer credit database of banking transactions by using big-data digital technology to process behavior data of activities such as mobile phone usage, travel and location reference.
Moody's noted that it is possible that regulators could enable linking banking data and nonbank behavior data if Baihang Credit Bureau proves its independence and accuracy in processing consumer information within the three-year license period.
