© Reuters. A man rides an electric bike past the CBIRC building in Beijing

SHANGHAI (Reuters) – China’s bank regulator on Saturday tightened requirements on the internet loan business of commercial banks, amid heightened scrutiny of online lending by internet giants such as Ant Group Co, the finance arm of Alibaba (NYSE:) Group Holding Ltd.

Commercial banks must jointly contribute funds to issue internet loans with a partner, and the proportion of capital from the partner in a loan should not be less than 30%, the China Banking and Insurance Regulatory Commission said in a notice.

The balance of internet loans issued by a bank with one partner, including its related parties, must not exceed 25% of the bank’s net tier-one capital, it said.

In addition, the balance of internet loans issued jointly by commercial banks and cooperative institutions may not exceed 50% of the bank’s total balance, the guidelines state. In a separate Q&A document, the regulator said firms must comply with the new rules by July 17, 2022.

The regulations will increase the potential capital needs for technology platforms such as Ant Group, which was on its way to raising $37 billion in an IPO based on its vast range of online lending services.

Those hopes were dashed when China’s regulators intervened to halt the listing in November, over concerns that over-lending consumer debt would pose a threat to the country’s financial system.

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