China struggles to defuse anger over P2P lending crisis
BEIJING Chinese authorities are rolling out 10 measures to curb rising risks caused by the troubled peer-to-peer (P2P) lending sector that has led to several protests in recent weeks, the official Xinhua News Agency reported yesterday.
A central government work group tasked with cracking down on online finance risks has held a meeting on the P2P industry to protect social and financial stability, the report said.
Since June, 243 online lending platforms have gone bust amid an intensifying crackdown on shadow banking, part of a broader campaign to reduce risks in the financial system. Many investors across the country hit the street to protest, demanding the government help them recover investments lost on failed platforms.
P2P platforms gather funds from retail investors and loan the money to small corporate and individual borrowers, promising high returns. They started flourishing nearly unregulated in China in 2011. At the peak in 2015, there were about 3,500 such businesses.
The new measures proposed by the central government include conducting compliance inspections on P2P companies, Xinhua reported.
Local authorities are also "strictly banned" from allowing the set-up of any new P2P companies or online finance platforms, it said.
Borrowers who try to avoid P2P loan repayments will be put on a blacklist in China's social credit ratings system.
Beijing also said it will seek a variety of ways to resolve P2P liquidity risks and protect the legal rights of investors. The government will also strengthen investor education to help increase public awareness of the risks, the report said.
The size of China's P2P industry is far larger than in the rest of the world combined, with outstanding loans of 1.49 trillion yuan (S$299.30 billion) according to data tracker p2p001.com. - REUTERS