Chinese regulators will ask local governments to prohibit the establishment of new peer-to-peer lending platforms as part of proposed measures to tackle risks arising from the troubled sector, the country's Xinhua News Agency reported Aug. 12.
The People's Bank of China and the China Banking and Insurance Regulatory Commission proposed the measures after investors on Aug. 6 protested in front of the CBIRC to demand a probe into the suspension of fund withdrawals in more than 100 platforms in July. The measures include asking local governments to forbid the registration of new P2P platforms and strengthen the management of registration of enterprise names.
The regulators will ask local governments to set up "communications windows" to respond to requests by P2P investors and carry out compliance inspections on P2P platforms. The regulators will also ask P2P platforms to tackle liquidity risks through mergers and acquisitions, asset realization and cooperation with financial institutions, according to the report.
Further, the measures include requiring P2P platforms and their shareholders to take responsibility when they close their businesses and to raise debt settlement rates. They also vowed to take action against P2P platforms' ill-intentioned exits and defaults on debts.
Only 36 new P2P platforms were set up in China during the six months to June 30, while 721 platforms stopped doing business during the same period, according to the country's National Committee of Experts on the Internet Financial Security Technology. In total, the country had 2,835 active P2P platforms in the first half.