Quick Take: China to Improve Oversight of Peer-to-Peer Lending
(Beijing) — China’s banking regulator issued detailed rules governing information disclosure for online peer-to-peer (P2P) lenders as the country continues to refine the mechanism that oversees the fast-expanding, scandal-plagued sector.
The detailed rules, released by China Banking Regulatory Commission (CBRC) on Friday, include a wide range of specific requirements. For instance, P2P platforms must make timely disclosures of funding sources, the amount of outstanding loans, loans that are overdue for more than 90 days, and the repayment plans from guarantors. They must also disclose lending with connected parties such as the platform’s own personnel.
P2P lenders will have six month to comply with the detailed disclosure rules, the CBRC said.
The disclosure requirements are building on top of a slew of rules that has come into effect since August 2016 as the government tries to rein in the ballooning lending outside the banking system. Those rules include requiring all P2P platforms to have commercial banks as their custodians of funds, that the platforms can be matchmakers only between lenders and borrowers, and they cannot raise funds for themselves.
Borrowers, sometimes with poor creditworthiness and shunned by banks, have flocked to those P2P platforms for loans, creating new risks for the entire financial system. While individual investors are drawn to these platforms by returns higher than bank deposits, millions suffered losses as fraud swept the sector since late 2015.
Contact reporter Leng Cheng (email@example.com)
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