China regulators warn that 90 pc of peer-to-peer lenders could fail in 2017

Nine out of 10 of the mainland’s peer-to-peer (P2P) lending platforms will struggle to survive this year as the government rolls out tightened regulatory supervisions, according to a multi-agency report on Friday led by the Beijing Bureau of Financial Work.

“The wild growth of online lending in recent years exposed a multitude of problems,” the report said. “P2P operators and regulators will face stern challenges to ensure a healthy growth of the P2P sector.”

About 500 P2P companies, out of the total 4,856 players across the nation, are likely to maintain their operations this year, the report said.

Beijing-based Nanhu Internet Finance Institute was listed as a co-author of the report, while another agency in Beijing’s Fangshan district that deals with fintech cyber security was also cited, however the group does not have an English name. A consortium of P2P firms also participated in the report.

The forecast by the local financial authorities added to worries about a run on deposits in the coming months as more P2P players are expected to face the prospect of liquidation.

The mainland initiated a review on P2P lenders following the introduction of tighter regulatory requirements in late 2016, such as the appointment of a custodian bank and full disclosure of the use of deposits.