With the new rules a single person can borrow a maximum of 200,000 yuan ($30,000) from a platform and a total of 1 million yuan ($150,000) in aggregate from different P2P platforms). For corporations the caps are five times higher, with the opportunity to borrow 1 million yuan ($150,000) on a single platform and 5 million yuan ($750,000) in aggregate.
P2P lending platforms are now not allowed to take public deposits, with firms that will need to use third-party banks as custodians for the funds of the investors. Platforms are also barred from selling wealth management products and issuing asset backed securities.
Wei Hou, a banking analyst at Sanford C. Bernstein in Hong Kong, said to Bloomberg that tighter regulation on P2P lending in China may encourage consolidation that aids the industry long-term.
“In the past when there basically were no limits, and lots of people operated in the grey area. It won’t be like that any more. Now that we have standards, you just follow the standards. The whole industry will become more normalised” said Xu Hongwei, chief executive of Online Lending House, to the Financial Times.
To be noted that the new regulations target just “internet credit companies”, with effects only on peer-to-peer lending sites, while other types of platforms, like equity crowdfunding and P2P investing ones, are not affected.
Alessandro is Co-founder & CMO of Crowd Valley. He has worked in the fintech industry, with marketplace investing and lending, since 2011. Has built and managed digital companies with distributed teams and international partners, and gained experience with both startups and large corporations, having worked with British Telecom, Bloomberg and the Grow VC Group.
Alessandro grew up in Italy, where he graduated with a B.A. in Economics at University of Parma, before to obtain a M.S. in Finance at Regent’s University London. He studied and worked in many different cities, including Munich, Geneva, London, Barcelona and Valencia. Genuinely passionate about financial technology and innovation, he loves to spend his spare time traveling and discovering new cultures. You can find him on Twitter at @aleravanetti.