At least 246 peer-to-peer (P2P) platforms in China were shut down in the first six months of 2016, reflecting tougher government supervision of the sector, according to a report by cnr.cn on Sunday.
The P2P industry, which has been a fast-growing sector, has been caught up in trouble surrounding an increase in illegal fundraising, the report said.
Industry analysts said even tighter oversight is in store, which will help the authorities crack down illegal activities, CRI noted.
As of the end of June, the number of functioning P2P platforms in China was 2,349, media reports said.
The government started to tighten regulation over P2P lending late in 2015. Chinese authorities released draft rules in December 2015, imposing 12 restrictions on P2P platforms.
Those restrictions included a ban on taking deposits from the public, commingling clients'money with their own, or providing any kind of guarantee for lenders, the Xinhua News Agency said.
Illegal P2P platforms in the country have raised -concerns and jeopardized investors' interests.
For instance, Ezubao, an online financing platform, allegedly took about 50 billion yuan ($7.71 billion) from about 900,000 investors, the Xinhua News Agency reported on February 1.
A crackdown on illegal P2P doesn't mean that the authorities plan to "kill off P2P lending," Dong Dengxin, director of the Finance and Securities Institute at -Wuhan University of Science and Technology, was quoted as saying in the report by cnr.cn.
However, it does show that the authorities are aware of risks in this sector, and that they aim to become more experienced in regulating illegal ones.
The State Council, the country's cabinet, has ordered a crackdown on the Internet finance sector, with a focus on P2P lending platforms, domestic financial news magazine Caijing reported in April.
The crackdown will focus on seven areas, including online payments, online lending, equity-based crowdfunding and online insurance, Caijing said, calling the efforts "unprecedented."