China's Banking Regulatory Commission Chairman Shang Fulin (L) shakes hand with Taiwan's Financial Supervisory Commission Chairman Chen Yuh-chang in Taipei, April 1, 2013. (Photo : REUTERS)
The China Banking Regulatory Commission plans to set 30 million yuan ($4.83 million) as registered capital for the peer-to-peer lending industry.
This is among the rules drafted by the Financial Inclusion Affairs Department at the CBRC for the growing peer-to-peer lending industry as the country aims to regulate the sector.
There is growing concern over default risks in the P2P lending platforms, as the sector surged to 252.8 billion yuan last year.
Around 275 platforms reported defaults or had difficulties withdrawing cash, while 41 percent were fraudulent, based on data compiled by Online Lending House, a website that tracks the sector.
Wangdaizhijia, another portal dedicated to the industry, noted that 92 P2P lending platforms ran into trouble in December followed by 69 in January.
Wangdaizhijia's chief researcher, Ma Jun, said that the platforms either went bankrupt or had difficulty in withdrawing funds as a result of frauds or demands for funds. He added that rising defaults and weak risk control were factors.
The commission also engaged experts to share their views on the draft rules, which are expected to be unveiled at the end of June.
"There was a consensus among the experts that the planned regulation should protect the industry rather than kill it," said Zhu Chunming, secretary-general of Guangdong Internet Financial Association.
"Leverage management is the proper approach to clean up the fraud platforms," Shi Pengfeng, the chief executive officer of Online Lending House, said in a statement on March 20, Friday.
Shi noted that it is difficult to set specific criteria since attention should also be given to other indexes such as business stability or risk control.
