(17 October 2019 – China) China’s Hunan province will ban all peer-to-peer (P2P) lenders in the most radical action taken by a provincial government against the industry notorious for frauds and defaults.
According to the Hunan Provincial Local Financial Supervision Administration, none of the 24 local P2P lending platform operators complied with regulations.
In a move that is likely to prompt other governments to take a tougher approach, the lenders will be banned from conducting any new business, along with all other companies from other provinces that operate such business in Hunan.
China’s P2P lenders have become an infamous example of the dark corners in the country’s financial system and shadow banking sector with a number of Ponzi schemes exposed.
More than 5,970 P2P lending platforms have defaulted on payment, absconded with cash or quit operations as of the end of September, according to data provider Wangdaizhijia.
That put at risk over 214 billion yuan (US$30.1 billion) of investments from more than 2.7 million lenders, who are mostly small investors with little financial knowledge lured by high returns.