CHINA’S peer-to-peer lenders are facing stricter regulations as the government moves to control the rapidly-expanding sector.
The China Banking Regulatory Commission (CBRC) told Reuters that it now requires all P2P lenders to register with the government, thereby creating a comprehensive database of every player in the industry.
The Chinese P2P sector has exploded in recent years, and has recently been valued at $93bn (£74.3bn). However, a series of fraud scandals have shaken investor confidence in the sector. In February, 20 Ezubao executives were arrested after a Ponzi-style scheme in which investors lost Y50bn (£6.2bn), in China’s biggest case of financial fraud to date. A number of smaller platforms have also disappeared, taking investor money with them, leading high profile financier Guo Guangchang to call China’s peer-to-peer lending sector “a scam”.
In early October, the CBRC released new guidelines on P2P lending, banning platforms from engaging in asset management activities or marketing high-risk securities, while all platforms must hold client money in third party accounts.
At the time, officials told the state-run Xinhua News Agency that they hoped to provide “market order” and protect the “vital interests” and “legitimate rights” of retail investors through the regulations. The new registration requirement shows that the government is serious about monitoring the sector more closely in the future.
The latest regulations were jointly issued by the CBRC, the Ministry of Industry and Information Technology, and the State Administration for Industry and Commerce, according to a CBRC statement.