The China Banking Regulatory Commission on Wednesday released rules that aim to rein in the country's loosely-regulated online lending industry. The new rules strengthen risk controls over the online peer-to-peer lending industry, which has been plagued by all manner of problems, including cash shortages, defaults Ricky Seals-Jones Cardinals Jersey , fraud, closures and absconding executives. The rules also clarify the fundamental nature of online lending firms and prohibit them from making any implicit guarantees to their clients. They also require third-party banks to serve as the custodians, experts noted, effectively relieving the lending platforms of control over their users' funds.
A financial website shows that the stock price of US-listed Chinese P2P firm Yirendai Ltd plummeted 22.01 percent on Wednesday to close at $24.52 a share. The plunge occurred after China's banking regulators rolled out detailed rules for the country's online lending industry. Photo: CFP
Chinese regulators on Wednesday unveiled rules to curb the growing risks threatening the country's loosely-regulated online lending market, sending shock waves throughout the peer-to-peer (P2P) lending industry.
Investors in US-listed Chinese P2P firm Yirendai Ltd took the news hard. The company's share price plummeted 22.01 percent on Wednesday (eastern time of the US), finishing the week down 29.50 percent.
Due to the stock's plunge in value Gabe Holmes Cardinals Jersey , law firms such as Law Offices of Howard G. Smith and Glancy Prongay & Murray LLP on Friday announced they would open an investigation on behalf of Yirendai's investors to determine whether the company or its managers had violated US federal securities laws.
Analysts generally see the new rules as a major setback for Yirendai, which will be prohibited from offering certain high-return products to lure investors. One of the new regulations specifies that P2P lending platforms are not allowed to sell asset-backed securities or financial instruments such as insurance, trust products and wealth-management products. Those restrictions will derail Yirendai's plans, announced on March 1, to offer consumer loan products structured like other asset-backed securities.
Yirendai is just one of the 2,000 or so Chinese P2P platforms that will need to adjust their businesses to comply with the new rules. The China Banking Regulatory Commission (CBRC) has given online lenders a 12-month grace period to bring their businesses in line with the new rules.But the CBRC didn't mention how to implement the new rules and how to punish those who violate the rules.
As of the end of June Justin Pugh Cardinals Jersey , there were 2,349 P2P platforms operating on the Chinese mainland, according to a report released in early July by P2P information provider wdzj.
The new rules come after China's P2P lending industry has experienced a rash of cash shortages defaults, fraud, closures and absconding executives. During the first half of this year, 515 P2P platforms were shut down after executives fled Markus Golden Cardinals Jersey , or after users had trouble getting their money back or for other reasons, according to wdzj.
By the end of June, there were 1,778 troubled P2P platforms in China, accounting for 43.1 percent of the total, according to the CBRC.
While strengthening risk control on P2P platforms D.J. Humphries Cardinals Jersey , the new rules also clarify the fundamental nature of online lending firms as information intermediaries instead of credit intermediaries, prohibiting them from making implicit guarantees about their investments and requiring them to appoint third-party banks to serve as custodians of their users' money, experts noted.
Lending limits
In the Interim Measures for the Administration of Business Activities of Online Lending Information Intermediaries, one of the most notable parts is the limits on the amount that individuals and companies can borrow.
Specifically, the cap for individuals is set at 200,000 yuan ($29 Robert Nkemdiche Cardinals Jersey ,989.50) from a single P2P platform and 1 million yuan from multiple platforms. Companies and other organizations are limited to borrowing up to 1 million yuan from one platform and 5 million yuan from multiple platforms.
Li Junfeng, director of the Inclusive Finance Department at the CBRC, said at a press conference on Wednesday that the Internet and big data technology can only be used in risk control and information gathering for micro-finance. However, large financing projects require on-site investigations and risk controls, which should not be handled by simply collecting online information and processing large amounts of data.
Looking at international practices, Li noted that some Western countries have set borrowing ceilings for online lending. For example Budda Baker Cardinals Jersey , in the US, companies can borrow no more than $300,000 from . Cheap Epic React Cheap Epic React Cheap Epic React Triple Black Cheap Epic React Racer Blue Cheap Epic React Crimson Cheap Epic React Flyknit Cheap Air Max Womens Cheap Air Vapormax 2018 Cheap Air Presto Burgundy http://www.jordansshoescheapforsale.com/