China to hide bad debt records for pandemic-hit borrowers who repay small loans

China’s central bank has unveiled a credit-rehabilitation policy to help individuals who defaulted on small loans rebuild their financial standing – part of a broader push to bolster the economy and repair household balance sheets.

The People’s Bank of China said the measure targets borrowers with a single instance of overdue debt incurred between 2020 and 2025 and not exceeding 10,000 yuan (US$1,421). If the debt is fully repaid by March 31, the default record will be hidden from credit reports.

“The policy was introduced to help pandemic-hit borrowers, who are actively repaying their loans, rebuild their credit swiftly,” the PBOC said in a statement on Monday, adding that the move aims to address the Covid-19 pandemic’s lasting economic fallout.

The policy will be automatically administered by the central bank’s credit reference centre, requiring no individual applications, and is due to be implemented in phases starting in 2026.

One of the central bank’s deputy governors, Zou Lan, said at a press briefing on Monday that while many borrowers affected by pandemic-related hardships have since repaid their debts, delinquency records remain on their credit reports, continuing to hinder access to new loans.

The new measure supports economic growth by invigorating grass-roots economic activity and helping financial institutions assess creditworthiness more accurately, Zou said.

  

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