Since the start of 2026, the roster of participants in the banking sector's anti-excessive rivalry movement has been steadily growing. This movement is no longer just a slogan; concrete corrective measures are being implemented at the business front line. An increasing number of regional banking associations are joining the wave, pushing the industry to move beyond low-level price wars and enter a new phase centered on professional expertise and value creation.
Recently, the Hunan Banking Association organized its member institutions to hold a signing ceremony for a self-regulatory covenant against disorderly competition. The association required all institutions to attach great importance to implementing their self-regulatory commitments and to actively resist all forms of disorderly and malicious competition.
Since the beginning of 2026, banking regulatory bodies and associations in many regions have convened special meetings on curbing excessive rivalry. These meetings have clarified the direction of corrective actions, signed self-regulatory pledges, and promoted the implementation of orderly industry standards. Some local regulators have even established monitoring and reporting mechanisms. For example, the Jilin Financial Regulatory Bureau stated it would focus on "excessive competition for deposits," "excessive competition for loans," and "excessive fee competition." It is building a monitoring indicator system covering key areas such as bank asset and liability sides and insurance cost sides, conducting quarterly data collection, summary analysis, and regular reporting. This aims to achieve early detection, early warning, and early resolution of disorderly competition issues.
In the view of one banking industry insider, commercial banks have long relied on a development model driven by "scale expansion," with a deeply ingrained operational inertia of "winning by volume." Their assessment systems force frontline institutions and relationship managers to rely on crude methods like price wars to boost scale in order to meet short-term performance targets, thereby increasing risks in the financial sector. The emergence of the anti-excessive rivalry movement is precisely aimed at reversing this situation.
Accelerated Implementation of Anti-Excessive Rivalry Across Multiple Regions
Since the start of 2026, the national banking sector's anti-excessive rivalry actions are no longer mere slogans on paper. Many regions are gradually putting corrective measures into practice at the business front line, with regulatory red lines and industry self-regulatory covenants weaving together a web of constraints. Recently, the Hunan Banking Association required all institutions to take their self-regulatory commitments seriously, actively resist all forms of disorderly and malicious competition, and work together to safeguard a fair and orderly business environment for the province's banking industry. On the same day, leaders and business department heads from 33 banking institutions signed and submitted their commitment letters on-site.
On July 9, the Shaanxi Banking Association also issued a "Self-Regulatory Covenant on Rectifying Disorderly Competition," focusing on key areas such as the real estate financial market, deposit and loan businesses, auto finance, credit card finance, wealth management and agency sales, marketing and promotions, and staff conduct. It established basic norms for the operational behavior of banking institutions.
Zhejiang's related initiatives have always been at the forefront nationally. In February 2026, a working meeting of the Zhejiang Market Interest Rate Pricing Self-Regulatory Mechanism required: emphasizing the institutional arrangements for self-discipline; strengthening the implementation and transmission of interest rate policies; resisting "excessive internal competition"; and urging financial institutions to optimize their interest rate pricing rules, organizational structures, information systems, and performance evaluation mechanisms to improve the scientific nature of pricing management.
Many other local financial regulatory bureaus also made similar demands during their 2026 regulatory work conferences. For instance, the Shanxi Financial Regulatory Bureau and the Xiamen Financial Regulatory Bureau both mentioned at the start of 2026 the need to strengthen cost management, carry out special rectification of disorderly competition, push institutions to focus on their core business and return to their origins, and continuously standardize industry order.
According to experts like Zeng Gang, Deputy Director of the National Finance and Development Laboratory, "excessive internal competition" has brought multiple harms in practice. It leads to inefficient allocation of financial resources, as substantial resources are poured into price wars and channel cost competition, crowding out investment in product innovation, risk control improvement, and customer experience enhancement. To meet scale targets, some banks compromise on risk review, relaxing customer qualification standards, which creates asset quality risks. Once the economy fluctuates or customers' repayment abilities decline, they face rising non-performing loan ratios and provisioning pressures. Some institutions blindly enter unfamiliar fields, deviating from their core business to chase short-term profits, increasing risk and resource misallocation.
"Furthermore, it damages employee development and the industry ecosystem. Frontline employees, trapped by performance pressures, fall into a vicious cycle of self-purchasing products and mutual order padding. Long-term high-pressure assessments and inefficient competition lead to rising employee turnover, with top talent flowing to other industries. It also constrains the transmission of monetary policy, as commercial banks distort market interest rates through unfair competition. The divergence between deposit and loan rates and policy rates expands, affecting the regulatory effectiveness of the central bank's interest rate tools," Zeng Gang stated.
What Does Financial Anti-Excessive Rivalry Oppose?
Based on the requirements from financial regulatory departments and related associations, a key focus of the banking sector's anti-excessive rivalry is opposing the use of low interest rates to snatch loan customers. "Our bank can offer high-quality clients mortgage rates below 3%," a bank personal loan manager said recently, adding that this business is not profitable and is mainly aimed at boosting scale. Another analyst believes this kind of excessive rivalry does not lead to a win-win situation. Banks continuously increase their investment, but overall total revenue does not see significant growth. Instead, they fall into irrational, internal-consumption competition, potentially creating new risks.
Data from the National Financial Regulatory Administration shows that the commercial banking sector's net interest margin (NIM) stood at 1.40% at the end of the first quarter of 2026, a record low in recent years. This was a sequential decline of 0.02 percentage points from 1.42% in the fourth quarter of 2025. This NIM figure is now lower than the non-performing loan (NPL) ratio. As of the end of the first quarter of 2026, the overall NPL ratio for commercial banks was 1.51%, up 0.01 percentage points from the end of 2025. The balance of NPLs reached 3.7 trillion yuan, an increase of 174.2 billion yuan from the previous quarter.
"The banking sector needs to enhance its independent and rational pricing capabilities, avoid price wars in lending rates, and standardize loan marketing behavior," stated a local market interest rate pricing self-regulatory mechanism.
Manual interest supplementation is also a target of the anti-excessive rivalry campaign. In practice, some banks used this as a tool for high-interest deposit-taking, promising clients interest rates higher than the publicly posted standard through "off-the-books agreements." They would complete the supplementary interest payments at month-end, quarter-end, or other assessment deadlines, effectively breaking through the upper limit of self-regulated deposit rates and increasing the bank's liability costs.
The "RMB Deposit and Loan Interest Rate Management Regulations," for which the People's Bank of China sought public opinion in June 2026, clearly define illegal manual interest supplementation as a form of high-interest deposit-taking. "This will help stabilize bank liability costs and alleviate the pressure from the continuous narrowing of net interest margins," an industry insider said.
Additionally, illegal commission rebates and discrepancies between insurance reports and actual practices are also key areas for rectification. In March 2026, the Hubei Financial Regulatory Bureau proposed guiding industry associations to issue self-regulatory norms targeting "excessive internal competition" behaviors such as high-interest rebates, illegal profit concessions, and malicious order-snatching by financial institutions. It will specifically scrutinize illegal rebates in mortgage and auto finance sectors, pushing the industry back onto a track of healthy competition.
"The National Financial Regulatory Administration focuses on both standardization and governance, enforcing market discipline, deeply rectifying disorderly competition, and strictly cracking down on financial black and gray industries. It is firmly promoting the 'alignment of reports and practices' in the insurance industry to effectively maintain order in the financial market. It urges financial institutions to firmly establish correct business, performance, and risk perspectives, improve governance mechanisms, strengthen incentive and constraint mechanisms, and shift from pursuing speed and scale to a focus on quality and efficiency," Ding Xiangqun, head of the National Financial Regulatory Administration, stated at the 2026 Lujiazui Forum in June 2026.
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