By the fourth quarter of 2015, the NPL ratio of China's commercial banks reached 1.67 percent, up 8 basis points quarter-on-quarter.
The uptrend started in the second quarter of 2013, according to data of the China Banking Regulatory Commission.
By the end of 2014, China's commercial banks were staring at more than 35.76 billion yuan in bad loans of credit card-holders alone, up 42 percent year-on-year, according to the China Banking Association's latest annual report on credit card development in China. The report was released in July 2015.
While China Promise's debt collector Li continues to make phone calls despite her hoarse voice, some of her colleagues may visit errant debtors for a face-to-face confrontation and to urge them to repay within a given time (usually seven days).
If they still don't repay, debt-collection agencies, working in tandem with law firms, will use legal remedies like dispatching lawyer notices, or even filing lawsuits.
"Everything must be legal and transparent, and every phone call, visit and written materials are recorded. Otherwise, we'll be no different from hooligans," said Li, laughing.
She sees her job as an essential role that helps build a society with better credit.
Agrees Xiao Bo, founder of Zero and One Internet Technologies Co Ltd, a Beijing-based enabler of trading in non-performing assets. Banks, he said, typically contract out some well-specified, totally legal debt-collection functions to external agencies.
Such tasks may include making phone calls and visiting a debtor's home. If debt-collection agencies exceed their remit or violate the law, banks cannot be held responsible, although their reputation may get besmirched.
"Debt-collectors generally don't adopt violent means. An odd extreme case could involve getting physical with truant debtors, but that's about it. For debt-collection agencies, profits are not so high as to compel them into adopting illegal methods," Xiao said.
But unlike banks, other lenders like peer-to-peer lending platforms, small loan companies and guarantee companies engaged in private lending are said to be not averse to dropping the kid-glove treatment and instead using threats to make errant debtors repay.
Stressed out, many debtors would heed that message and payup, if they could, Xiao said. Ye Mingbo, 24, a shop assistant, said he received phone calls from debt-collection agencies in May 2015, when he could not repay some 8,000 yuan.
Ye had used his credit card to buy a laptop and camera lenses on installment basis. He could not repay in time as he was jobless for three months after he made the purchases.
After six months, Ye started receiving text messages from the bank, urging him to repay. Phone calls followed from the bank's in-house credit card services department. Then phone calls from a debt-collection agency started. On the fourth day, the agency called Ye, taught him how to analyze his financial situation and repay.
Despite outsourcing debt-collection to external agencies, banks have their own teams to deal with bad loans and seek help from lawyers, courts and the police.
