The number of peer-to-peer lending platforms in China finding themselves in trouble in the first half of the year has soared 7.5 times from the same period in 2014, according to a report yesterday.
During January to June, 419 P2P platforms were alleged to commit fraud or making it difficult for investors to withdraw cash amid stiffer competition in the industry, said Online Lending House, a web portal that tracks the sector. The figure in the first half has surpassed 275 reports for the whole of last year.
"With more new platforms and capital flowing into the industry, competition has become fiercer among players," said Ma Jun, chief research officer at Shanghai Ying Can Investment Management Consulting Co.
P2P lending, with offers easier access and higher returns than bank deposits, is very appealing to Chinese individual investors. But the high rates of defaults will see the China Banking Regulatory Commission unveiling rules in the coming months to tighten the industry.
Monthly transactions on 2,028 P2P platforms hit a record high 65.9 billion yuan ($10.63 billion) in June, raising the first half year's amount to 300.6 billion yuan, up 267.5 percent annually.
The portal forecast total P2P turnover to touch 800 billion yuan by year end.