Chongqing, known as the "micro-loan capital," is at a pivotal moment of industry adjustment.

On April 1, 2026, the Chongqing Local Financial Regulatory Administration announced the formal "exit" of 21 small loan companies in the first quarter. The following day, Ruan Lu, a key figure influential in Chongqing's small loan sector and deputy director of the Economic Committee of the Chongqing Municipal Committee of the Chinese People's Political Consultative Conference, was placed under disciplinary review and supervisory investigation for suspected serious violations of discipline and law.

Looking back over a year ago, reports exposed disguised usury practices, revealing the "underwater model" where loan facilitation platforms artificially inflated interest rates through guarantee and membership fees. Regulators subsequently began a comprehensive review of the industry, with small loan companies being a key focus.

An investigation found that the actual lending volume of some small loan companies far exceeded the limits allowed by their registered capital. Instead of raising funds through compliant methods like bond issuance or asset securitization, they took a shortcut via "channel business"—essentially "renting out" their micro-lending licenses to loan facilitation platforms or tech companies lacking lending qualifications. These entities handled customer acquisition and risk control, using third-party payment institutions to automatically deduct high "membership fees." The resulting loans often had comprehensive financing costs breaching the 36% annualized red line.

Channel for Exceeding Lending Limits

The collective exit is likely linked to an audit investigation in 2025.

It was learned that in 2025, the National Audit Office conducted an audit at NetsUnion Clearing Corporation, discovering that some small loan companies used accounts and payment services irregularly provided by third-party payment companies to conduct online lending, issuing loans with leverage ratios far exceeding requirements based on their registered capital. The comprehensive financing costs for some loans were significantly above 36% annualized. Among the most problematic were Chongqing Liangjiang New Area Tongrong Small Loan Co., Ltd. and Chongqing Liangjiang New Area Baosheng Small Loan Co., Ltd.

Taking Tongrong Small Loan as an example, its registered capital is 300 million yuan. According to regulations effective in 2025, small loan companies' fundraising via non-standardized forms like bank loans cannot exceed their net assets from the previous year-end, while fundraising via standardized forms like bonds cannot exceed four times that amount. Records show Tongrong Small Loan has not used standardized fundraising methods like bonds or ABS, meaning its theoretical maximum lending scale should be 600 million yuan.

However, an industry insider revealed that the actual loan volume associated with Tongrong's platforms was far greater. The lending capital did not come from its own funds but was achieved through a "channel business" path operating at the edge of regulation—the actual loan funds primarily came from third-party institutions without lending qualifications. "It can be understood as 'renting out' the license as a channel to platforms and private capital lacking lending qualifications in the market, collecting channel fees."

The insider explained that Tongrong essentially provided a license interface to unqualified partners, acting as the nominal lender to collect fees. Partners could then set up online lending platforms, using fees like financing guarantees and memberships to push up the comprehensive annualized rate, targeting lower-tier customer segments. Channel fees in the industry typically range from 0.5% to 0.6% of the loan amount.

Public information shows online platforms registered under Tongrong included apps like "You Jie," "Qi Dai," and "Gou Jie." These apps announced a halt to new business by the end of 2025, only providing repayment services for existing users.

However, numerous users on third-party complaint platforms report issues. Many complainants state that the actual loan rates on "You Jie" and "Qi Dai" exceeded the national 24% cap, and the apps have recently been delisted, making it impossible to view orders or make repayments.

The Hidden Channel Supply Chain

So how does this channel business of renting out licenses operate?

According to multiple industry sources, in this hidden supply chain, the licensed small loan company is primarily responsible for front-end customer acquisition and nominal lending, acting as the "channel" through app or mini-program interfaces, with very limited proprietary capital. Mid-platform operations are handled by small-to-medium loan facilitation platforms lacking lending qualifications, responsible for actual customer acquisition, risk control, and funder connections. For fee collection, third-party "shell" tech companies charge high fees under names like "membership fees" to circumvent interest rate cap regulations. The fund settlement link relies on some small-to-medium payment institutions providing payment channels for these irregular operations, enabling automatic fund deduction and settlement.

Previously, several entities holding small loan licenses had provided channels for multiple disguised usury products.

A user who used the "You Jie" platform reported being matched with a loan product called "Run Yuan Hua." After borrowing 4,000 yuan, 600 yuan was inexplicably deducted as a so-called membership fee, followed by high interest repayments. "The annualized rate far exceeded national regulations," she stated.

Complaint platforms indicate the "You Jie" platform is a typical "loan supermarket" model, linking to numerous platforms with questionable qualifications, potentially involving various disguised usury issues. Some complainants allege being secretly opted into a 999 yuan "group purchase order" when borrowing through "Qing Hua You Pin" via You Jie. Another stated that in early 2025, borrowing 6,000 yuan through "Hui Hua Qian Bao" on You Jie resulted in an extra deduction of over 1,000 yuan in membership fees, on top of normal repayments.

The operators of these platforms mostly have questionable qualifications but successfully accessed the market through platforms registered under small loan companies. For instance, "Run Yuan Hua" was registered by Shenzhen Rungan Financing Guarantee Co., Ltd., which does not hold a small loan license. Regulations prohibit financing guarantee companies from engaging in proprietary or entrusted lending.

Another platform, "Qing Hua You Pin," was filed by Shanxi Huaqu Technology Co., Ltd., which also lacks financial licenses.

The industry insider noted that beyond cooperation with financial institutions, there are more covert models for this channel business. For example, some small loan companies immediately transfer the credit assets formed after lending to unqualified actual funders. Superficially, this appears as compliant asset transfer, but it essentially amounts to "renting out" the license.

Payment institutions also play a key role in this chain. "Previously, some payment institutions, pursuing transaction fee income, were lax in reviewing merchant partners, turning a blind eye," the insider pointed out. They opened payment accounts for numerous "tech companies" or "online malls" lacking lending qualifications or trying to evade regulation, tacitly allowing fund deductions under names like "rights fees" or "product premiums."

This phenomenon has seen recent improvement. It was reported that several Shanghai-based payment institutions received window guidance to comprehensively clear out payment accounts for loan facilitation services of "7+4" local financial organizations and stop related automatic deduction services.

Ongoing Industry Rectification

According to reports, informed sources stated that after relevant authorities intervened, following clues from the Audit Office, it was discovered that Tongrong Small Loan's issues had existed for a long time, leading to the uncovering of suspected benefit transfers between Tongrong and Ruan Lu, who was then head of the Chongqing Local Financial Regulatory Bureau overseeing the small loan industry.

Verification with several loan facilitation institutions revealed that the audit and investigation began last year and indeed identified Tongrong's regulatory violations, though whether it involved benefit transfers remains uncertain.

On April 2 this year, an official notice announced that Ruan Lu is under disciplinary review and supervisory investigation.

Public records show Ruan Lu served as deputy director of the Chongqing Financial Affairs Office in May 2010, rising to director around 2013, and later held positions including party secretary and director of the Chongqing Local Financial Regulatory Bureau. During his tenure, Chongqing's small loan industry developed rapidly.

Data from the People's Bank of China shows that by the end of 2022, Chongqing's small loan balance reached 238.42 billion yuan, accounting for a quarter of the national total.

However, with rapid market development, various risks and irregularities grew in the shadows. Due to a lack of detailed, differentiated entry standards, the market became filled with many "zombie" small loan companies that were inactive or uncontactable. On January 5, 2026, the Chongqing Local Financial Regulatory Administration listed 37 "disconnected" or "shell" local financial organizations in one announcement, the majority being small loan companies.

Some small loan companies with weak capabilities and lacking sustainable operations turned to relying on their licenses for "channel" operations, extracting fees and further disrupting industry order.

For example, Baosheng Small Loan, also cleared in this round, had its actual controller, Zheng Weijing, criminally detained for suspected illegal public deposit taking. The financial group he controlled illegally absorbed funds totaling 803 million yuan through platforms including Baosheng, affecting nearly 9,200 investors. Baosheng was consequently listed as a "disconnected, shell" institution, with several shareholders listed as失信被执行人 (dishonest persons subject to enforcement) and its legal representative subjected to consumption restrictions.

Starting in 2026, regulators have begun strictly investigating this business. According to the "Financial Product Online Marketing Management Measures" released on April 24, 2026, and effective from September 30, non-bank payment institutions are prohibited from listing financial products like loans and asset management products as payment tool options and from providing marketing services for such products.

On April 30, 2026, the Chongqing Local Financial Regulatory Administration released draft implementation rules for supervising small loan companies, stipulating a prohibition on assisting entities without lending business qualifications in filing websites, mobile applications, or mini-programs with financial attribute wording.