China’s P2P Lenders Now Required to Appoint Commercial Banks as Fund Custodians

By Chen Na, Wu Yujian and Wu Hongyuran

(Beijing) — Chinese regulators have further tightened rules to clamp down on fraud and misuse of funds in the scandal-plagued peer-to-peer (P2P) lending industry by requiring lending platforms to appoint commercial banks as custodians of investor funds.

Under the new rules, investor funds received by a P2P platform must be stored in only one commercial bank before they are lent to borrowers, the China Banking Regulatory Commission said on Thursday. The policy echoes a series of measures issued last year that limits P2P platforms to the role of facilitating small private loans and related information sharing.

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