(Yicai Global) Nov. 23 -- Regulators are becoming increasingly concerned with China's online lenders as they head overseas to list. In order to tackle industry issues, China's central bank and the China Banking Regulatory Commission are holding a working conference today.
Provincial and municipal finance offices that approved micro-lending firms within their regions will attend the conference, which will be presided over by Pan Gongsheng, vice president of the People's Bank of China and Zhu Shumin, deputy chairman of the banking regulator.
To guide capital into rural and less-developed areas and improve financial services in these regions, China ran a nationwide pilot program for micro lenders in May 2008. As applying to open these companies is easier than official financial institutions, provincial departments saw massive numbers of firms looking to register. However, the companies found themselves in fierce competition and resorted to violating laws and regulations, such as granting loans to credit-ineligible students.
An insider attending the conference told Yicai Global that the finance office from his province prepared operational data for micro lenders within its administrative region, and picked out abnormal statistics. "Our reporting materials also include cash loan businesses, and focus on problems in the design of these companies' standard products and the appropriateness of borrowers," he said.
On Nov. 21, the Internet Financial Risk Special Rectification Working Group issued a notice immediately suspending the approval of new micro lender. The ban also prevents recently-set up companies from carrying out trans-provincial micro lending.