China continues crack-down on P2P lenders
(31 October 2019 – China) The regulator in China’s financial hub has ordered Shanghai’s more than 40 peer-to-peer lenders to exit the business in the latest blow to an online industry that has shrunk by half this year.
Some of the nation’s biggest platforms including Ping An-backed Lufax and Dianrong.com have been told in recent meetings with Shanghai’s financial services bureau to stop issuing new products and to wind down existing peer-to-peer lending services, the South China Morning Post is reporting.
The move follows similar action taken earlier in the month by Hunan province and indicates China’s determination to overhaul an industry that had more than US$150 billion of loans outstanding and upwards of 50 million investors at its peak but was plagued by fraud and defaults.
The central government in late 2017 introduced a complex registration process to clean up the sector, with officials in Shanghai identifying 160 problem areas such as overly high interest rates, misuse of funds and exaggerated return figures. No P2P lender has passed that process yet.