China will launch a system of loans to pay for home appliances, tours and weddings, state media said today, in a move to stimulate spending during the current economic slowdown.
The government will allow the establishment of so-called "consumption finance companies" in Beijing, Shanghai, Tianjin and Chengdu on a trial basis, the Shanghai Securities News reported.
The companies, which will not accept public deposits, will lend to consumers to allow them to pay for tours, weddings, home decoration, electronic products and home appliances, said a draft regulation posted on the national banking regulator's website.
The level of the loan should not be greater than five times the borrower's monthly income, it said.
The firms will approve the loans quickly and will require no collateral, making them more attractive than commercial banks, the Shanghai Securities News said.
The companies should have registered capital of no less than $43.8 million, according to the draft rules.
The draft regulation said interested financial institutions with five years' experience in related business and total assets of at least 80 billion yuan could invest in the companies.
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