China gives P2P lenders two years to exit industry

China said all existing peer-to-peer (P2P) lending platforms must become small loan providers within two years, the latest official edict aimed at curbing the once-booming industry, reported Reuters.

All Chinese P2P firms need to clear outstanding loans in less than one year before switching to small loans, according to a notice issued by China’s Internet Financial Risk Special Rectification Work Leadership Team Office, which was launched by Beijing to mitigate risks in the online lending sector.

For firms that manage more than RMB 5 billion ($710.3 million) in outstanding longer-maturity loans, the grace period can be extended by up to two years, according to the notice.