BEIJING, March 21 Reuters China39;s tightening of rules for consumer finance companies is likely to force consolidation in the roughly 120 billion sector that provides highinterest loans for millions of people shut out of traditional banking.

The National Financial Regulatory Administration NFRA announced revamped and stricter rules for the sector on Monday, measures that are expected to drive China39;s consumer finance companies to seek deeperpocketed investors or merge.

The tougher standards for the last line of credit for China39;s riskiest borrowers are the latest steps aimed at containing financial risks in the world39;s secondlargest economy. Exuberance in some sectors, especially property, witnessed in prior years is taking a major toll now on China39;s household consumption, its middleclass wealth and confidence.

The rules, changed after a decade, require consumer lenders to have more than 1 billion yuan 138.91 million in registered capital more than triple the previous minimum and to secure a major investor holding a stake of at least 50 of its equity.

Of China39;s 31 consumer lenders, 10 fall short of the capital requirement, Reuters checks showed. And roughly half of all the companies do not have a major investor that would qualify them under that standard, according to Han Kun Law Offices, which compiles an annual report on the sector for the China Banking Association CBA.

China39;s consumer finance companies provided the equivalent of 116 billion to…