China's biggest lending platforms were not spared in the latest crackdown by regulators.
Regulators have ordered more than 40 peer-to-peer (P2P) lenders in Shanghai to shutter their business, in an ongoing cleanup of China's scandal-ridden industry, «Bloomberg» reported (behind paywall) on Thursday.
The firms affected include Ping An-backed Lufax and Dianrong.com, which are among the country's biggest platforms. The city's P2P platforms were verbally ordered to stop issuing new products and wind down existing P2P lending services, the publication said, citing people familiar with the matter.
P2P lending, once seen as an important credit mechanism, grew rapidly during the deregulation of China's financial sector and online platforms proliferated. However, a string of ponzi schemes and fraud have sparked public anger and prompted tighter regulatory scrutiny of the shadow banking sector.
Shrinking Industry
Two weeks ago, «South China Morning Post» reported that authorities in Hunan province announced a complete ban on P2P lenders after operators failed to comply with regulations.
As of end-July, there were only 268 functioning P2P platforms, down from 6,000 at the sector’s 2015 peak, the China Banking and Insurance Regulatory Commission (CBIRC), «Reuters» reported earlier this month.
In September, new lending totaled 69.7 billion yuan ($9.9 billion) – 37 percent down from the year before and the lowest since 2015, according to «Caixin Global,» which cited data from online lending research portal Wangdaizhijia. Lenders were facilitating loans totaling 250 billion yuan monthly at the industry's peak in late 2016 and early 2017.
