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The Bank of Shanghai has signed up as both an infrastructure sponsor and lender, providing China Rapid Finance with payment channels, fund custody services, and undisclosed lending capital. Photo: SCMP Pictures

Sino Guarantee, Bank of Shanghai inject fresh capital into online lender China Rapid Finance

China Rapid Finance, operator of the mainland’s largest online consumer lending platform, is looking to step up its domestic expansion after forging wide-ranging partnerships with China United SME Guarantee Corp (Sino Guarantee) and the Bank of Shanghai.

Sino Guarantee and Bank of Shanghai said on Tuesday that they will both join the China Rapid Finance platform, a development that could see more traditional financial service providers collaborate with players in the country’s growing peer-to-peer (P2P) lending industry.

The state-owned Sino Guarantee, the premier financial guarantor for loans and bonds on the mainland, has made an initial commitment of 500 milllion yuan (HK$ 566.5 million) as lending capital for the China Rapid Finance platform.

It has also invested US$20 million in China Rapid Finance as part of the online lending start-up’s Series C financing round, in which a total funding of US$70 million was raised.

The Bank of Shanghai, the mainland’s biggest regional bank, has signed up as both an infrastructure sponsor and lender, providing China Rapid Finance with payment channels, fund custody services, and undisclosed lending capital.

“China Rapid Finance has created a new model for an internet finance platform through its collaboration with traditional financial institutions,” company founder and chief executive Zane Wang Zhengyu said. “These strategic partnerships strengthen our leadership position in the consumer credit market.”

The China Rapid Finance platform has grown to 1 million borrowers, and processed a market-leading 8.8 million loans as of the end of last month.

The nascent P2P industry allows third-party investors to lend money to unrelated individuals, or peers, through online marketplaces, not traditional banking channels.

Wang said alliances are vital to reach out to and provide affordable loans to the unique market segment he called EMMA – emerging middle-class, mobile-active – comprising consumers without a formal credit history. Most of the estimated 500 million EMMA consumers in China cannot get loans from traditional financial institutions.

“Benefitting from government support and a large addressable market, companies providing inclusive finance and internet finance solutions, such as China Rapid Finance, will have huge potential in China,” said Jiang Hong, a vice-president at Bank of Shanghai.

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