Tighter rules may hit rise in P2P loans

China's P2P (peer-to-peer) online lending transactions rose at a quicker pace of 10.7 percent quarter on quarter to 30.2 billion yuan (US$4.83 billion) in the first three months of this year, but the growth may slow on talk of tighter regulations, Analysys International said yesterday.

The January-March growth surpassed the 9.4 percent posted in the fourth quarter of last year, but slower than the over 13 percent gain in previous quarters, the research firm said in a report.

Introduced to China in 2006, P2P lending refers to money lent to unrelated individuals usually via online platforms. In most cases, the money lent are unsecured personal loans and borrowers do not provide collateral against default. The loans carry a higher annual interest rate of up to 24 percent.

Although the China Banking Regulatory Commission has started to inspect P2P lending activities in the first quarter, it has not set a license system for market players.

"There are not detailed regulations on the sector yet but rules will likely be tightened eventually," Analysys International said.

But the report warned that demand is still high and more investors and borrowers continue to rush into the market.

The CBRC last month warned the public about illegal fundraising activities conducted by the P2P lending websites. They also commit an offense if they pool personal lenders' money before finding borrowers.