Over 5,600 institutions have been removed! Involving six types of local financial organizations, credit-like businesses are accelerating their cleanup.

Author | Guo Congcong

Editor | Zhou Yanyan, Xiao Jia

Video Editor | Chen Zekai

Typesetting | Huang Yue

Recently, the National Financial Supervision and Administration Bureau announced that since 2024, more than 5,600 local financial organizations that were “missing,” “shell companies,” or severely violating regulations have been eliminated nationwide. By the end of December 2025, the number of these six types of institutions had decreased by 26% year-on-year, and the decrease compared to the historical peak was as high as 55%, showing significant effectiveness in the industry’s “reduction and quality improvement.”

This regulatory rectification primarily focuses on six types of local financial organizations: microloan companies, financing guarantee companies, pawnshops, financial leasing companies, commercial factoring companies, and local asset management companies. It strictly addresses market chaos such as excessively high fees, disguised multiple charges, and improper collections.

The background for this round of large-scale eliminations stems from a joint notice issued by the National Financial Supervision and Administration Bureau, the China Securities Regulatory Commission, and the State Administration for Market Regulation in 2024 titled “Notice on Further Strengthening the Supervision of Local Financial Organizations.” Although this document has not been publicly released, it has been communicated and deployed within various provinces. The document clearly states that over the next three years, the total number of local financial organizations must not increase, and cross-provincial operations will be strictly regulated. The main focus is to enhance the supervision of existing institutions and resolutely eliminate non-compliant organizations, promoting the industry to return to its core functions and achieve reduction and quality improvement.

In the context of tightening regulatory policies and comprehensive upgrades in compliance requirements, six types of local financial organizations, including microloan companies and financial leasing companies, are undergoing an unprecedented “reshuffle” and transformation.

Microloan Companies and Commercial Factoring: Accelerated Clearing of Loan-like Businesses

As key areas of this rectification, microloan companies and commercial factoring companies, due to their business models involving loan-like characteristics, have become the main battleground for regulatory “reduction and quality improvement.” Both types of institutions are facing a significant reduction in the number of organizations and a rapid exit of non-compliant companies.

The elimination of microloan companies continues to intensify. According to the People’s Bank of China’s “Statistical Data Report on Microloan Companies for the Third Quarter of 2025,” as of the end of September 2025, there were 4,863 microloan companies nationwide, a decrease of over 500 compared to the end of September 2024, and nearly half of the historical peak of nearly 9,000 companies in 2015, showing a very obvious downward trend.

Numerous withdrawal cases have emerged across the country: cities such as Beijing, Shenzhen, and Guangxi have issued relevant announcements, canceling the operational qualifications of a number of non-compliant microloan companies. In April 2025, the Beijing Municipal Financial Supervision and Administration Bureau canceled the operating qualifications of eight microloan companies; in June of the same year, three microloan companies were included in the withdrawal announcement issued by the Shenzhen Municipal Financial Management Bureau; in December of the same year, among the 30 “missing” and “shell” local financial organizations listed by the Guangxi Zhuang Autonomous Region’s Financial Management Bureau, 19 were microloan companies.

It is noteworthy that some capable microloan companies are also being withdrawn. On December 31, 2025, the Guangdong Provincial Financial Management Bureau agreed to the cancellation of the business qualifications of Guangzhou Minjin Microloan Co., Ltd., which has a registered capital of 200 million yuan and is controlled by Minsheng Jinfu (Beijing) Investment Management Co., Ltd.; in October of the same year, the Shenzhen Municipal Financial Management Bureau approved the cancellation of business qualifications for Shenzhen Chengzheng Technology Microloan Co., Ltd., a subsidiary of Legend Holdings, which has a registered capital of 500 million yuan; Chongqing Renbao Microloan Co., Ltd. also initiated the cancellation process in June 2025 and is a subsidiary of PICC Financial Services Co., Ltd.

The withdrawal of commercial factoring companies is also advancing rapidly. On February 3, 2026, the Shenzhen Municipal Financial Management Bureau announced that from March 2025 to January 2026, a total of 441 commercial factoring companies exited the market through cancellation, revocation, or removal. The Shanghai Municipal Financial Management Bureau also reported that from December 2018 to December 2024, a total of 275 commercial factoring companies exited the Shanghai market.

On January 4, 2026, the Guangdong Provincial Financial Management Bureau issued an announcement regarding the list of non-compliant financing leasing and commercial factoring companies in Shenzhen, simultaneously disclosing 1,145 non-compliant commercial factoring institutions, requiring the listed companies to apply for cancellation or to remove the term “commercial factoring” from their names and business scopes within 30 days from the announcement date, prohibiting them from engaging in related businesses.

Wang Pengbo, a senior analyst at Botong Analysis, believes that the concentrated withdrawal of many commercial factoring and microloan companies is due to multiple reasons. Historically, the industry had relatively loose entry and regulatory standards, and some regions had low substantive operational requirements for institution establishment, leading to a large number of institutions merely holding licenses without conducting real business, resulting in prominent issues of shell companies and missing institutions. These institutions lack sustainable operational capabilities and naturally became the first to be cleared after comprehensive regulatory inspections.

At the same time, both types of institutions generally exhibit issues of deviating from their main business operations. Wang Pengbo stated: “Microloan companies engage in illegal cross-regional lending, non-compliant sources of funds, and indirectly absorb deposits through related parties; commercial factoring companies conduct loan-like businesses without a real trade background, using factoring channels for capital turnover, which violates the regulatory positioning of serving small and micro enterprises and supplementing formal finance.”

Wang Pengbo also added: “Of course, there are also reasons related to the overall uneven risk control levels in the industry, with many small institutions lacking comprehensive risk control models and post-loan management capabilities, leading to continuous deterioration of asset quality. Coupled with changes in the economic environment resulting in rising overdue rates, it becomes difficult for them to sustain operations.”

He noted that as regulation tightens, the costs of compliance operations have significantly increased, including capital constraints, financing leverage restrictions, and monitoring of fund flows, which gradually leads to many institutions’ inability to meet compliance conditions and thus causes industry-wide concentration and clearing.

Financial Leasing: A Heavy Disaster Area for Missing Shell Companies, Welcoming an “Exit Wave”

Among all types of institutions being eliminated, financing leasing companies have the most outstanding withdrawal numbers. Financial management departments across various regions have intensively issued announcements urging “missing,” “shell,” and non-compliant organizations to exit the market in an orderly manner, accelerating the industry’s “exit wave.”

The Shenzhen Municipal Financial Management Bureau’s announcement in February indicated that from January 2025 to the end of January 2026, a total of 288 financing leasing companies in Shenzhen exited the industry through cancellation, revocation, removal, name changes, and changes in business scope. The Shanghai Municipal Financial Management Bureau statistics show that from December 2018 to December 2024, 870 financing leasing companies exited the industry in Shanghai.

At the same time, more financing leasing institutions are being urged to exit. The aforementioned announcement from the Guangdong Provincial Financial Management Bureau disclosed that 818 financing leasing institutions have been identified as “non-compliant;” the Shanghai Municipal Financial Management Bureau also urged 771 “missing” and “shell” financing leasing companies to exit the industry in July 2025. Additionally, Hubei Province published the second batch of “missing” and “shell” local financial organizations intended for exit on December 29, 2025, which included 72 financing leasing companies.

All local announcements clearly specify regulatory requirements: non-compliant institutions listed must actively apply to the market regulatory department for cancellation or for name and business scope changes to remove the term “financing leasing” within a specified period. Failure to comply will result in local financial work departments requesting market regulatory departments to handle the matter according to regulations; those involved in illegal operations will be coordinated with relevant departments for legal penalties; and those suspected of criminal activities will be referred to public security organs for investigation.

Wang Pengbo analyzes that the reason the financing leasing industry has become a heavy disaster area for missing shell institutions is primarily due to relatively loose initial thresholds. Many institutions obtained licenses but have not engaged in substantive financing activities for a long time. Coupled with some institutions engaging in illegal lending and related arbitrage under the guise of leasing, the overall low operating rate in the industry results in a high proportion of “zombie institutions,” which naturally become the main targets of elimination after strict regulatory inspections.

Pawnshops and Financing Guarantee Companies: Traditional Institutions Cleared Simultaneously

Pawnshops and financing guarantee companies, as traditional local financial organizations, are also facing large-scale withdrawals and frequently appearing on local withdrawal lists.

In the case of pawnshops, in March 2026, the Dalian Municipal Financial Management Bureau planned to terminate the operating licenses of eight pawnshops, including Dalian Longhui Pawn Co., Ltd., Dalian Daxin Pawn Co., Ltd., and Dalian Jinhui Pawn Co., Ltd. The announcement indicated that these enterprises generally have issues such as not participating in annual inspections, unable to locate registered addresses, no tax records, and no social security payment records, classifying them as typical “missing” and “shell” institutions. In the list of “missing” and “shell” local financial organizations released by the Guangxi Zhuang Autonomous Region Financial Management Bureau in December 2025, five pawnshops are included among the 30 institutions.

Financing guarantee companies are also on the list. In the public notice by the Guangxi Zhuang Autonomous Region Financial Management Bureau in December 2025, six financing guarantee companies were included in the list of 30 institutions. In January 2026, during the withdrawal actions of the Xinjiang Production and Construction Corps, in addition to six microloan companies and five pawnshops, there were also two financing guarantee companies.

According to reports from the 21st Century Economic Report, the background for this large-scale withdrawal is the joint issuance of the “Notice on Further Strengthening the Supervision of Local Financial Organizations” by the National Financial Supervision and Administration Bureau, the China Securities Regulatory Commission, and the State Administration for Market Regulation in 2024, requiring that the total number of local financial organizations “only decrease and not increase” over the next three years, strictly limiting cross-provincial operations and focusing on eliminating “missing,” “shell,” and non-compliant organizations.

Under this policy guidance, the future direction of the industry has attracted widespread attention. Regarding the future development of local financial organizations, Wang Pengbo predicts that there will be a trend of increased regional concentration and a return to local core business.

“In terms of performance, we will see a continuous reduction in the number of institutions, optimization and integration of existing ones, basic restrictions on cross-provincial operations, with a focus on meeting the needs of small and micro enterprises and the real economy within the region. The industry will shift from scale expansion to quality improvement, with compliant leading institutions occupying the main market share, and regional layouts aligning more closely with local financial regulatory responsibilities and local industry financing needs,” Wang Pengbo analyzed.

In this large-scale withdrawal, various regions have achieved positive results in conjunction with their jurisdictions. For example, the Tianjin Municipal Financial Management Bureau disclosed in the “Report on Administrative Law Enforcement Work in 2025” published in January 2026 that since the commencement of regulatory rectification work, Tianjin has eliminated over a thousand non-compliant local financial organizations, completing 80% of the total withdrawal task.

Against this backdrop, the synchronized advancement of industry standard development and policy support is underway. In September 2025, Guangzhou City established the “Coordinated Working Mechanism for the Development of the Financing Leasing Industry,” led by municipal leaders and spearheaded by the Municipal Financial Office to build a cross-departmental coordination platform, focusing on better supporting the financing leasing industry to serve the manufacturing and service sectors of the Greater Bay Area.