China’s online lending crackdown may see 70 per cent of businesses close
- Yidai, with about 32,000 lenders, is the latest to close shop after ‘months’ of losses
- Authorities plan to wind down small P2P lending platforms as part of measures against shadow banking
The number of Chinese peer-to-peer (P2P) lenders may fall by 70 per cent this year, as the nation intensifies its crackdown on riskier financing.
As few as 300 companies will remain by the end of the year, according to an estimate from Shanghai-based research firm Yingcan Group.
The number of operators dropped by more than 50 per cent to 1,021 in 2018 from a year earlier, Yingcan said, adding that there’s been no new entrants into the market since August.
Yidai, an online P2P lending intermediary, is the latest to exit the business. The company set up a committee to start refunding its lenders after “months” of losses, Yidai said in statements over the extended holiday weekend.
It has about 32,000 lenders with an outstanding principal balance of 4 billion yuan (US$581 million), and expects to repay them in three-to-five years.
Yidai, which received investment from SoftBank China Venture Capital in 2014, also said shareholders and executives are not allowed to leave the country.