P2P Platforms Ordered to Prepare Data Disclosures
China has started preparations for a long-expected pilot program to register the country’s remaining peer-to-peer (P2P) online lending platforms in a national monitoring system.
The monitoring system is part of China’s response to abuses as the burgeoning online P2P phenomenon got ahead of regulators. Since 2016, the P2P industry has been the focus of a crackdown on internet financial risks after lax supervision and fraud led to a string of scandals and resulted in the collapse of hundreds of platforms.
More than two-thirds of China’s P2P platforms have shut down. As of March, 1,021 platforms remained in operation, among which 13 had loan balances of more than 5 billion yuan, according to the P2P research firm Wangdaizhijia. But data from another company tracking the P2P industry showed there are 30 platforms with loan balance of more than 5 billion yuan.
The new monitoring system consists of two databases: an information disclosure database and a real-time transaction monitoring database. Two central government watchdogs last month told qualified P2P platforms to get ready to submit information to the two databases.
Large P2P platforms with loan balances of more than 5 billion yuan ($750 million) that have passed compliance inspection must be registered with the information disclosure database by the end of May, according to requirements by the Office of the Special Rectification Work Leadership Team for Internet Financial Risks along with the P2P Internet Lending Risk Specialist Rectification Team.
The remaining compliant P2P platforms with loan balances of less than 5 billion yuan are required to register by the end of June.
Local offices of the two government watchdogs will provide a list of compliant platforms to the National Internet Finance Association of China (NIFA), the government body responsible for operating the information disclosure database.
It’s not clear how many compliant P2P platforms there are. Progress in compliance checks varies among local inspectors, and some provinces have not completed their checks.
Currently there are 102 P2P platforms in the National Internet Finance Registration Disclosure Service Platform run by NIFA. These platforms still need to pass compliance checks before they can be registered, an official at NIFA told Caixin.
The second database will be co-managed by two central government watchdogs and the National Computer Network Emergency Response Technical Team/Coordination Center of China, known as CNCERT, a nongovernmental cybersecurity monitoring center. This database aims to monitor the real-time transactions on all P2P platforms.
Regulators aimed to start P2P registration in pilot cities in more-developed areas in the second half and complete the national registration system by 2020, knowledgeable individuals told Caixin.
Lending sites that fail to register in the monitoring system will be forced to close, according to a policy document issued in January.
Contact editor Han Wei (firstname.lastname@example.org)
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