Report: Peoples Bank of China Expected to Regulate P2P Lenders, Payment Firms
The People’s Bank of China (PBOC) is expected to strengthen the regulation of internet finance firms including peer to peer lenders and payment platforms. The report by China News references a statement by the PBOC that labels some financial products offered by Fintech firms as systemically important and thus will be included in their “macro-prudential assessment” or MPA. China is home to the largest Fintech market in the world that also includes the largest peer to peer lending platforms in the world. The goal of the PBOC is to reduce risk in the internet finance sector.
This is apparently the first time the PBOC has included internet finance in the MPA. Previously only traditional financial firms were included in the assessment. This represents a shift in the financial services sector as the ubiquitous nature of internet finance is poised to surpass traditional operations.
The same report quoted Xue Hongyan, Director of the Suning Financial Research Institute – affiliated with a large Fintech provicer. Hongyan said;
“The PBOC move is actually a good sign for the Fintech market because regulation indicates recognition of importance, and MPA, a mid-to long-term regulation framework, indicates that short-term risks are well handled.”
Fintech, or internet finance, has grown rapidly across China. As mobile internet penetration has become commonplace, so has digital financial service providers. A manager from the Bank of Shanghai said it is commonly believed that peer to peer lending almost is equivalent to the lending from traditional banks. The top three P2P lenders are said to top RMB 1 trillion in lending with monthly inflows ranging from RMB 30 to 50 billion.
Additionally, the payment sector stood at RMB 35 trillion in 2016. That is expected to double by the end of 2017.