By Tang Guhan
China’s authorities are mulling over the measures to further strengthen the rules for Peer-to-Peer (P2P) Lending platforms in the second half of the year, as reported by the Yicai News.
Government watchdogs will enhance the long-term supervision systems in the related areas as well as facilitate the self-inspections of P2P platforms across the country. Meanwhile, the relevant council will examine the operations of P2P companies.
Companies who passed the examinations are allowed to continue their businesses while those who did not will be forced to quit the market through mergers and transfers practices.
Data has shown that the government’s two-year regulations in the area have led to positive effects where 2,448 online lending platforms have exited the market and only 2,188 companies have survived.
According to the guidelines given by the Chinese government, the P2P platforms are supposed to run only as information intermediaries while preventing financial risks and protecting investors’ interests.
Borrowers and lenders should be responsible for the credit risks, and the P2P platforms only serve as information intermediaries to disclose information in real- time.
Related authorities have warned investors that there are still violators who have conducted illegal fundraising activities in the disguise of Internet Finance.
The government will crack down on the illegal acts, for instance, racketeering, and runaways among others.
To better recover investors’ losses, authorities will input the borrowers’ personal information to the nation-wide credit reference systems.
Analysts in China have underlined the P2P industry in the country as it is still far from its maturity level right now as compliance risks among these platforms even exist.
