Jun 06, 2017 05:32 PM

P2P Lenders to Face Tighter Disclosure Rules

(Tianjin) – Efforts to clean up China’s scandal-plagued peer-to-peer (P2P) lending sector are taking another step forward with a pilot program that imposes tighter information disclosure requirements to protect customers from being swindled.

Under the initiative announced on Monday, companies will have to give people who use their P2P platforms a range of information including their registration address, shareholders, who provides custodian services, how many investors they have, their bad loan ratio and their outstanding loans. Altogether 47 separate pieces of information will need to be disclosed, 32 of which are mandatory, according to the National Internet Finance Association of China (NIFA), which is in charge of the pilot.

Ten firms were selected to take part including Lup2p, an online lender backed by the country's second-largest insurer Ping An Insurance Group, and Jimubox, which counts smartphone maker Xiaomi Inc. as a shareholder. But the association will encourage other online lenders to join the program, which will be used to help formulate unified disclosure standards for the industry, NIFA president Li Dongrong, a former deputy governor at the People’s Bank of China (PBOC), said at a forum in Tianjin to launch the pilot.

The association was set up in March 2016 by the PBOC, the central bank, to oversee and set standards for the booming Internet finance industry. It has 408 members including banks, insurance companies, securities firms and P2P lenders.

The information disclosure pilot is the latest move by regulators to tighten oversight of P2P lending which has boomed over the last four years as borrowers shunned by the formal banking system flocked to the platforms to get loans. Savers were also attracted to the sector hoping that the money they lent to the platforms would earn higher returns than bank deposits.

But the industry’s reputation has been sullied and the confidence of both borrowers and lenders had been dented as a lack of regulation and supervision allowed risky lending and fraud to proliferate.

The most infamous scam was Ezubao, a leading P2P service until it was shut down in December 2015. According to police who investigated the scheme, it milked more than 50 billion yuan out of about 900,000 people in less than two years, using fake companies posing as borrowers.

The authorities finally stepped in to tame the industry last year. In August, the China Banking Regulatory Commission (CBRC) and three other central government agencies published the first set of unified regulations to clamp down on fraud, including the imposition of ceilings on how much a person or company can borrow through a P2P website and a ban on pooling investor money to make loans. Companies were given 12 months to comply.

Regulators have followed up with more rules including requiring lending platforms to appoint commercial banks as custodians of investor funds.

The crackdown has forced many P2P lending companies to close down. The number of online P2P platforms declined fell to 2,148 in May from 3,078 in June 2016 according to, an internet portal that tracks the sector.

Contact Reporter Leng Cheng (

You've accessed an article available only to subscribers
Share this article
Open WeChat and scan the QR code