(Yicai Global) Dec. 1 -- Following the imposition of a moratorium on applications to establish online microlending businesses, regulation of cash loans is now looming.
A source close to a Beijing financial regulatory agency said it will not approve the filing of any peer-to-peer (P2P) platform which involves cash loans, ChinaTimes reported.
"Beijing financial regulatory departments will reject a filing if any business of a P2P platform is found to violate regulations. This certainly includes illegal cash loans, to be specific, unqualified lending, huge profits, high interest rates, etc." Beijing will shortly issue updated requirements for filings by internet lending platforms, the source added.
Nearly 2,700 cash loan platforms now operate in China, industry data shows. More than 590 P2P lending websites also conduct cash loan businesses, making up 16 percent of the total number of P2P platforms.
Unregistered businesses and platforms may not engage in non-operating internet information services, per Chinese law. "Filing is a crucial step for compliance, and a platform must take this seriously to continue to eist. Once the filing management system is implemented, unregistered platforms are likely to be forced to exit or transform; therefore, the platforms must complete the filing under relevant laws and regulations, which is the first step to success," the general manager of a P2P platform said.