Core Viewpoint - The small loan industry in China is undergoing significant transformation and adjustment, with a notable reduction in the number of companies and loan balances, indicating a shift from quantity to quality in the sector [2][5][6]. Group 1: Industry Changes - In Chongqing, 11 small loan companies exited the market within two months, with 9 of them leaving due to regulatory measures, reflecting the local financial management's commitment to risk management [1][3]. - As of June 2025, there are 4,974 small loan companies in China, with a total loan balance of 736.1 billion yuan, down 18.7 billion yuan in the first half of the year [2]. - The number of small loan companies has decreased to approximately 55% of the peak in Q3 2015, with nearly 4,000 companies exiting over the past decade [4]. Group 2: Regulatory Environment - The exit of small loan companies is seen as a "clean-up" of problematic institutions, driven by enhanced regulatory requirements and a focus on compliance [3][5]. - Regulatory measures have become increasingly stringent, with detailed requirements on loan concentration, financing leverage, and major related transactions [3][6]. - The 2025 regulations further standardize the behavior of small loan companies, indicating a shift towards stricter oversight [5]. Group 3: Market Dynamics - The contraction of the small loan industry is attributed to policy adjustments, market competition, and the need for self-transformation among companies [5][6]. - Traditional banks and consumer finance companies are expanding their services, putting pressure on small loan companies that rely on high-interest rates to cover risks [5][6]. - Many small loan companies have lagged in digital transformation and risk management, leading to a natural selection process in the industry [6]. Group 4: Future Outlook - The ongoing transformation in the small loan industry is viewed as a starting point for rebuilding a healthy ecosystem, moving towards compliance and technology-driven services [6][7]. - Future successful small loan institutions are expected to focus on local markets, niche scenarios, and refined risk management capabilities, complementing traditional financial services [7]. - The industry is anticipated to enhance the efficiency of financial resource allocation, ultimately benefiting the multi-layered financial system [7].

Core Viewpoint - The implementation of new regulations in the lending industry is prompting institutions to shift from an annual interest rate of 36% to 24%, while a new model called "24% + Equity" is emerging as a workaround to these limits [1][10]. Group 1: Regulatory Changes - The new regulations from the National Financial Regulatory Administration, effective from October 1, require commercial banks to clarify service fees and include them in the comprehensive financing cost, effectively lowering the annual interest rate to below 24% [1][10]. - Many lending institutions have begun transitioning to comply with the new regulations since May, indicating a significant industry shift [1][10]. Group 2: Emergence of "24% + Equity" Model - The "24% + Equity" model is characterized by two types of products: small equity products, which charge monthly fees for limited financial and lifestyle services, and large equity products, which tie fees to the loan amount and can cost from 199 to 1999 yuan [2][5]. - The model allows institutions to maintain profitability by offering virtual services and leveraging third-party equity suppliers, creating a new revenue stream [7][9]. Group 3: Consumer Complaints and Issues - There has been a significant increase in consumer complaints related to the "24% + Equity" model, with over 5000 complaints reported, primarily concerning default selections for services and complicated refund processes [10][11]. - The model's compliance and sustainability are under scrutiny, as the regulatory environment may impose further restrictions on such practices [10][12]. Group 4: Third-Party Equity Suppliers - The rise of the "24% + Equity" model has led to the emergence of third-party equity suppliers, who act as intermediaries between lending platforms and service providers, earning commissions for their services [8][9]. - Competition among these suppliers is intensifying, with a focus on pricing as the primary factor for procurement decisions [9][10]. Group 5: Future Outlook - The sustainability of the "24% + Equity" model hinges on the ability to address consumer complaints effectively and adhere to regulatory requirements, emphasizing the need for transparency and customer consent [11][12].