Sep 05, 2019 (China Knowledge) - P2P online lending platforms are set to be incorporated into China Central Bank’s credit system amidst tightening regulations of the financial and online credit sectors within the country. The tightening of regulations is part of efforts to tackle risks, frauds and malpractices within the credit lending firms.
Issued as the “Notice Concerning Strengthening P2P Online Lending Sector Credit System Establishment”, this new guideline requires P2P online lending platforms to be incorporated into the Credit Reference Center of the PBoC. Information, such as online lending interest rates, must be disclosed to relevant finance agencies, databases and organizations. P2P online lending platforms must also provide relevant information to Baihang Credit, which is the only officially licensed personal credit agency in China.
Credit information of P2P lending platforms will be collected, regardless of their operational status. New penalties will also be imposed on defaulting borrowers of P2P online lending. Some of the penalties include higher loan interest rates and restriction limits to loan and insurance services.
This new regulation is part of efforts in to reduce financial and credit risks within China in recent years. Given the complexities of P2P lending, the stricter rules will likely provide protection and reduce unnecessary risks for the large number of lenders.
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