CRI听力: Chinese Economists: Banks Should be more Prudent When Issuing Credit Cards to Students

Anchor: Chinese economists have urged the country's commercial banks to take prudent steps when issuing credit cards to college students.

The warning comes in response to a report, which shows the number of bad accounts in Chinese commercial banks in has been on the rise as a result of issuing an excessive number of credit cards.

He Fei takes a closer look.(www.hXen.com)

Reporter:

In China, college students have been finding it very easy to get their hands on credit cards over recent years. Many of them can obtain around 6,000 yuan or nearly 900 US dollars, after submitting an application to a bank that requires certain basic information to confirm their identity.

"As far as I know, it's very convenient to apply for a credit card on campus. We can see banking staff promoting credit cards beside canteens and libraries. They ask us to apply for a card and promise to give us favorable treatment."

Indeed, the college students have benefited from the forward-looking strategy of commercial banks.
Ma Xiaoxin, a financial planner at the Bank of Communications, explains.

"College students are an excellent potential target group for our credit card business. Their educated background and employment prospects help them develop into high-end customer sources for our banks. So we must take the first step when they are still at college."

But there is growing pressure for commercial banks to halt the rate they issue credit cards to college students due to a rising number of bad accounts.

Guo Tianyong, a professor from the Central University of Finance and Economics, says banks should change the way they issue credit cards.

"Banks should adopt strict procedures to evaluate credit card applications from college students. The excessive expansion of China's commercial banks should hold responsibility for the bad accounts with regard to credit cards."

At the end of June, China's central bank said in a report that outstanding credit card payment exceeded 5 billion yuan, or 700 million US dollars in the first quarter. These bad accounts saw a sharp increase of more than 130 percent year on year.

Statistics indicate that college student credit card holders have contributed a lot to the bad accounts as many students have no stable income to pay their credit. Moreover, the loose procedures of applying for credit cards have resulted in some dishonest students avoiding payment of credit.

In view of this situation, economists encourage banks to rethink about their credit card business on campus and come up with prudent issuing procedures.

HF CRI news.