With bad loans and repayment collateral in focus, Chinese banks are increasingly using satellites to evaluate their clients’ terrestrial assets, mounting a hi-tech offensive to safeguard against rising credit risks.
China Merchants Bank and Shanghai Pudong Development Bank started making use of satellites this year, following a 2022 launch by Ping An Bank and a 2020 move into satellite remote-sensing technology by Zhejiang E-Commerce Bank.
Furthering the trend, the Postal Savings Bank of China and the China-headquartered Chang Guang Satellite Technology sent a jointly developed satellite into space this month, the Economic Observer reported.
Access to satellite-aided remote sensing – an outgrowth of China’s space technology since its commercialisation kicked off in 2014 – helps banks track assets such as property and vehicles for which they intend to lend money or have already made outstanding loans, analysts said.
High-resolution satellite pictures help gauge the status of loan collateral to ensure it remains viable for repossession in case of a loan default, they explained.
“The goal is to reduce non-performing loans and assess better the rural and small business market when traditional credit records may not be complete,” said Liang Yan, a professor of economics at Willamette University in the US.
“My understanding is that some banks use proprietary satellites and remote sensing to monitor borrower-collateral assets – such as agricultural land, construction progress on real estate projects and industrial activity – to assess and control credit risks of their loans,” Liang said.
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