More banks are offering clients individual credit with no collateral as demand for loans increases.

Bank of East Asia is poised to step into the non-collateral individual credit market soon to bolster its lending growth, a source said.

The Hong Kong-based bank is the third overseas bank to offer the product, which is still new in the Chinese mainland. Maximum credit limits will be 200,000 yuan (US$28,973), the source said.

Overseas banks are expanding their products in the Chinese mainland to drive retail banking business. Overseas banks including HSBC, BEA and Citigroup have locally incorporated to gain full access to the Chinese retail banking market.

BEA follows rivals such as Standard Chartered Bank and Citibank in moving into the market.

Pioneer

Non-collateral individual credit was launched in the Chinese mainland in 2007 by Standard Chartered Bank.

Clients with a stable occupation and salary can apply for the loans, with a length of no more than four years.

Standard Chartered met a warm response from Shanghai clients, and then introduced the products in Shenzhen and Beijing.

"We are also surveying and analyzing the feasibility of launching the products to other cities," Standard Chartered said. "One thing for sure is that China's consumer finance market enjoys huge potential."

Standard Chartered targets white-collar workers aged between 22 and 35 with a monthly salary of more than 3,000 yuan. The loans are mainly used for traveling, home decoration and education.

Loans which don't require collateral charge a higher interest rate than the benchmark rate. Borrowers are banned from using the loans to buy homes or invest in the stock market.

Banks can enjoy higher interest and fee income on the products, where the risks are higher than loans with collateral. Non-collateral retail credit is popular in matured markets.

Sluggish market