China comes up with 10 measures to tackle risks from troubled P2P lending sector

Chinese authorities are rolling out 10 measures to curb rising risks caused by the troubled peer-to-peer (P2P) lending sector that has led to several protests in recent weeks, the official Xinhua news agency reported on Sunday.

A central government work group tasked with cracking down on online finance risks has held a meeting on the P2P industry to protect social and financial stability, the report said.

Since June, 243 online lending platforms have gone bust amid an intensifying crackdown on shadow banking, part of a broader campaign to reduce risks in the financial system. Many investors across the country hit the streets to protest, demanding the government help them recover investments lost on failed platforms.

P2P platforms gather funds from retail investors and loan the money to small corporate and individual borrowers, promising high returns. They started flourishing nearly unregulated in China in 2011. At the peak in 2015, there were about 3,500 such businesses.

The new measures proposed by the central government include asking local governments to set up “communications windows” to respond to requests by P2P investors and conducting compliance inspections on P2P companies, Xinhua reported.

Local authorities are “strictly banned” from allowing the set-up of any new P2P companies or online finance platforms, it said.