China took steps to rein in the rapidly growing and lightly regulated market for online micro-lenders in the government’s latest crackdown on internet finance, sending shares of US-listed Chinese financial firms into a tailspin. A top-level Chinese government body issued an urgent notice on Tuesday to provincial governments urging them to suspend regulatory approval for the setting up of new internet micro-lenders, sources who had seen the notice told Reuters. The multi-department body, tasked by the central government to rein in risks in the internet finance sector, also told local regulators to restrict granting of new approvals for micro-loan firms to conduct lending across regions. Beijing started a relentless crack down on the internet finance sector last year, issuing guidelines and rules to regulate online financial activity following a spate of scandals, frauds and high-profile peer-to-peer (P2P) failures. The crackdown on micro-lenders comes as authorities warn about rising household debt, which includes mortgages and consumer loans.
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