Apr 04, 2019 (China Knowledge) - China is expected to launch a new pilot registration program for the country’s remaining peer-to-peer (P2P) lenders in a national monitoring system during the second half of this year.
The program which is will be led by the Office of Special Rectification Work Leadership Team for Internet Financial Risk and the P2P Internet Lending Risk Specialist Rectification Team will start registration in the country’s more developed areas in the second half before completing the national registration system by 2020.
China’s P2P industry which became a focus in the government’s campaign to crackdown on financial risk in the country has seen much consolidation in recent years after multiple instances of fraud was reported in the country which led to greater government regulation and the collapse of many others.
To be registered on the new platform, P2P lenders will have to meet certain requirements in regard to their registered capital, risk reserves and lenders’ risk compensation. Regulators have suggested that national platforms should have a paid-in registered capital of RMB 500 million while regional platforms will need at least RMB 50 million.
In addition, this registered capital must come from the company’s shareholders and can not be entrusted or leveraged funds.
Provincial financial regulators will be in charge of registering and regulating regional P2P platforms with the operations of these regional platforms also limited to the provinces in which they are registered.
For national platforms with operations spanning across more than one province, these platforms will be subject to approval by central financial regulators before they can be registered.
Such restrictions may force some regional platforms to further shrink their operations and may result in greater consolidation as smaller platforms may join hands to form platform chains under a single group.
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