A Chinese government body has urged provincial governments to suspend regulatory approval for the establishment of new online microlenders, Reuters reported Nov. 21, citing sources that have seen a notice issued to local governments.
Provincial-level governments in China were also told to restrict the granting of new approvals for these companies to lend across regions, the sources said. The government body was tasked by the central government to clamp down on risks in the online finance sector.
Microlenders providing loans over the internet have expanded quickly due to loose rules, typically meeting demand for credit from individuals who are unable to obtain loans from Chinese banks.
The State Council's information office and the People's Bank of China could not be immediately reached for comment, the report said.
Online consumer lending in China more than tripled in 2016 to almost US$140 billion, Reuters said, citing a report by the Cambridge Centre for Alternative Finance.
On the back of growth in this sector, several Chinese fintech companies have listed in the U.S., including Jianpu Technology Inc, PPDAI Group Inc and Qudian Inc.