Emphasis will be on inclusive financing
Chinese authorities will roll out rules governing the country's peer-to-peer (P2P) platforms, which are expected to set borrowing limits for the sector, a move experts said on Sunday highlights the regulatory emphasis on inclusive finance.
The China Banking Regulatory Commission (CBRC), together with several other departments, will set specific borrowing limits in the Interim Measures for the Administration of Business Activities of Online Lending Information Intermediaries, which are expected to be issued around February 2017, domestic news portal thepaper.cn reported on Saturday, citing anonymous sources close to the matter.
Specifically, the report said an individual would be able to borrow no more than 200,000 yuan ($30,211) from a single P2P platform and no more than 1 million yuan in total from various platforms.
As for companies or other organizations, the amount should not exceed 1 million yuan from one platform or 5 million yuan from several platforms.
But Meng Tian, deputy secretary general of the Association of Shanghai Internet Financial Industry, said it remains uncertain whether these borrowing caps will appear in the final version of the regulations.
According to a draft version the CBRC released in December 2015 for public comment, P2P platforms should focus on small-scale lending and, with adequate risk management capabilities, should keep close control of borrowers' total balances from all P2P platforms.
The previous draft and the possible borrowing caps signal that regulators intend to guide the P2P platforms to provide inclusive finance, supporting the financing needs of medium-sized, small and micro-sized enterprises and individuals, Meng told the Global Times on Sunday.
Luo Mingxiong, president of Beijing Jingbei Crowdfunding Technology Co and director of the Institute of Internet Finance of Shanghai Jiao Tong University, agreed.
"At present, some P2P platforms may see 'big orders' for money, lending tens or even hundreds of millions of yuan to some real estate enterprises or other capital-intensive sectors, instead of supporting individuals and small and micro-sized enterprises," Luo told the Global Times on Sunday.
"They will need to adjust their business once the borrowing caps become official," Luo said, noting that tighter controls are inevitable.