Mar 25, 2019 (China Knowledge) - With China tightening regulations around the peer-to-peer (P2P) lending industry, P2P lenders in the country are turning their businesses towards loan facilitation for financial institutions.
P2P lenders which had enjoyed rapid growth over the past few years by connecting individual borrowers and lenders in the country, replacing banks in the process have been hit hard by numerous scandals in the country that have left their customers stranded, forcing regulators to clamp down on the industry and resulting in many such companies winding up their businesses.
Now, more than two-thirds of the country’s lenders have shut down and the surviving ones are being encouraged by the government to move towards loan facilitation and helping financial institutions to issue loans, spreading default risks in the industry across the financial sector.
Lexin, the first US-listed Chinese P2P lender reported last year that 66% of its funding came from institutional partners during the fourth quarter and the company has partnerships with more than 100 financial institutions, helping them to issue new loans.
Similarly, 360 Finance, another US-listed P2P lender reported that its fourth quarter growth last year came from its loan facilitation business which grew four times to USD 155 million for the period.
Other lenders are also now focusing on diversifying their funding sources to include more financial institutions and to increase the number of partnerships they have with financial institutions.
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