P2P lender shields funds with bank deal

Beijing-based online lender Jimubox has signed an agreement with China Minsheng Bank to safeguard investors' funds, the latest example of peer-to-peer (P2P) lenders cooperating with commercial banks amid tightening regulations on the sector.

Jimubox plans to use Minsheng Bank as a conduit for its investors to conduct all their financial transactions, including checking, investing and withdrawing funds, seamlessly through a platform, currently being built, linking the bank's official website.

Renrendai and Minshengyidai, another two online P2P platforms, also joined the agreement.

Wei Wei, co-founder of Jimubox, said in a statement that the P2P platform is capable of ensuring fund security by using a third party like a bank to safeguard custody.

CreditEase, another Chinese lending service, signed a similar strategic agreement with China Citic Bank in January, and plans to cooperate with the Industrial and Commercial Bank of China and China Construction Bank by the end of June.

The number of P2P loan platforms in China nearly doubled last year to 1,575. The amount of funds raised on the platforms surged by 139 percent to 252.8 billion yuan (US$40.5 billion) in 2014, according to Online Lending House, a web portal that tracks the sector.

As part of the nation's shadow banking sector, concerns have been raised over the lack of rules on P2P lending services, which has led to some online platforms closing without lenders getting their money back.