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China issues first guidelines for P2P lenders in Shenzhen

(CNTV)    10:00, October 01, 2017

(Photo/CGTN)

Shenzhen Internet Finance Association, in the southern Chinese city Shenzhen, released peer-to-peer (P2P) lenders guidelines to exit on Friday, forbidding them to move offices, shut down websites and get management team out of touch during the exiting process.

It is the first time that such guidelines are issued in China.

The directive required P2P lenders, who decide to exit from the business to contact the association that will report to the municipal finance regulator based on the level of risks.

The existing P2P platforms should also inform investors and unveil its exit timetable, non-performing assets solution and clearance plans, the guideline said.

State-owned enterprises and listed companies should offer "reasonable" capital support to the P2P platforms that they backed when dealing with non-performing assets, in a bid to narrow down the gap between non-performing loans and outstanding balance, according to the guideline.

Those who did not follow the exit requirements and result in negative social influences will be reported to the city’s finance regulator, it said.

To strengthen supervision and regulation of the online lending industry, Shenzhen has launched an information sharing platform to expose discipline and law violation in the industry. The platform went online on Wednesday.

China’s P2P platforms have thrived since 2013 as investors pursue higher returns and small business and individuals seek low-threshold funds. However, it is also a high-risk industry that needs more regulation.

In the 12-month period that ended in August 2016, 887 online lending platforms have exited from business, and the act of 226 of them was defined as "vicious" because of a sudden shutting down, according to data from wdzj.com, a P2P industry news website. 

(For the latest China news, Please follow People's Daily on Twitter and Facebook)(Web editor: Jiang Jie, Bianji)

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