China has cleared the way for a new bank to enter the market and begin lending to small and micro-sized businesses.
An announcement Thursday (Jan. 5) said Yilian Bank has received clearance from the China Banking Regulatory Commission to begin operation in the SME lending space. The bank has reportedly received licenses for both small loans and private banking.
Yilian Bank is owned by internet company Meituan-Dianping, making it the first company in its industry to receive these dual licenses. The corporation said it looks to provide financing to local merchants on its platform.
“Consistent with our ‘second-half battlefield’ strategy, the newly formed banking and loan businesses aim to provide convenient and value-added financial services to millions of micro and small local merchants, which is a natural extension to our existing services, including branding, marketing, on-demand delivery and proprietary IT support system,” explained Meituan-Dianping Senior Vice President Rongjun MU.
Reports said the new lender will focus its lending activity in the restaurant and dining sector, an area Meituan-Dianping said lacks traditional finance access and faces high interest rates.
All loan application steps can be completed online, and funds can land in a business’ account within a day of approval, the company said. The firm also vowed to be competitive on interest rates and flexible on interest calculation, basing interest off of remaining loan balances instead of the initial, total amount borrowed.
“As an internet company, Meituan-Dianping aspires to improve business efficiency with internet-based credit approval technology and flexible interest calculation method in order to provide merchants with more convenient and value-added products,” a senior employee at the Meituan-Dianping Financing Business Department said in another statement.