Administrations for Industry and Commerce in Shanghai and Shenzhen has suspended the registration of Internet Finance firms. (Photo : Reuters)
Reports from Beijing Business Today confirmed that Administrations for Industry and Commerce in Shanghai and Shenzhen has suspended the registration of Internet Finance firms. The suspension of registration of the internet finance platform comes into effect since January 4. According to Newspaper reports, suspension of registration also includes finance and outsourcing in Business scope. Administration for Industry and Commerce in Beijing has also issued a similar statement, although it is yet to be confirmed by the Administration, according to China Org.
This move comes just two weeks after the Government started to evaluate public opinion on peer-to-peer lending, with respect to the first regulation. This step is considered to prevent financial risks for lending firms and to safeguard the security of lenders in a better way, also for other platforms which are relevant to peer-to-peer lending.
The suspension order comes with imposing 12 restrictions on peer to peer companies. Prohibition has been enforced on pooling money from lenders for funding own projects and from accepting public deposits.
The Administration has also prohibited providing any type of guarantee to lenders, according to reports received. The newspaper also quoted the statement made by Li Zichuan, chief information officer of peer-to-peer lending data provider wd315, which said about the change in attitude of the Administration. He is also reported to say that this suspension will help all related departments to sort out the risk exposure that are already existing.
Reports further quoted Li Zichuan as saying that the suspension will not have enough effect on the value of registration for internet finance platforms that are already existing. The suspension comes in the wake of increased numbers of P2P lending without having any intermediary like banks. According to data gathered from wdzj.com, there were 2612 P2P and 1157 other lending platforms having problems, which has prompted the Administration to take such a step.
