Edition: English | 中文简体 | 中文繁体 Монгол
Homepage > Biz Video

Sub-anchor: New guidelines: P2P lending should be small-scale


08-25-2016 05:22 BJT

P2P, or peer-to-peer lending has become a new channel for investment in China. It's done without a traditional financial intermediary such as a bank. And it's grown fast online, as people seek higher returns. But the industry has also been fraught with problems. So authorities have released new guidelines that aim to tighten regulation of the sector. CCTV's Jin Yingqiao joins us in the studio for more.

Q1, What do the guidelines say?  How will they tighten control?

A1, Well, after a time of fast but patchy development, regulators including the China Banking Regulatory Commission are finally laying down the rules. This comes eight months after China started a campaign to crack down on faulty P2P lenders. According to the new rules, P2P lenders should mainly just do small scale lending. The sector should target borrowers who are not serviced by financial institutions. The guidelines say an individual can borrow no more than 200 thousand yuan on one P2P platform.

And his or her total sum of loans cannot exceed one million yuan across different platforms. For legal entities, the limit is one million yuan on a single platform, and 5 million yuan total in aggregate. The guidelines stipulate that P2P platforms are just brokers facilitating transactions. They cannot take in public deposits--customers' money must be at a third party financial institution. They cannot pool investors' money to fund their own projects, or provide any kind of guarantee for lenders.

Q2, Tell us more about the background. What led to the new rules?

A2, Well, some P2P platforms do big projects like housing and car mortgages, which involve huge sums. They will be directly impacted by the new rules. Authorities say many platforms have veered from their middleman role between borrowers and lenders, and started to provide guarantees for lenders. Some platforms have been suspected of false advertising or illegally absorbing public deposits. Some made off with investors' money after business went sour.

P2P platforms typically offer yield rates above 10 percent while China's benchmark interest rate for one-year bank deposits stands at just 1.5 percent. Authorities believe that there are also hidden dangers, such as credit risks and liquidity risks, that could affect the financial market order and social stability. Many investors lose everything when borrowers simply disappear. There was a "clean-up" campaign months ago, and during the first half the year, over 500 platforms closed down. Over 2,300 are now in operation. At the peak, there were 4,000.

Follow us on

  • Please scan the QR Code to follow us on Instagram

  • Please scan the QR Code to follow us on Wechat