The China Banking Regulatory Commission (CBRC) and three other ministries jointly announced new rules on Wednesday to tighten regulations over the country's peer-to-peer (P2P) lending platforms.
A statement on the website of the CBRC said P2P platforms are not allowed to take deposits from the public, set up asset pools and sell wealth management products. Providing any type of guarantee for lenders is also banned.
The regulations also limit the amount individuals and companies can borrow from P2P sites.
An individual can borrow no more than 1 million yuan ($150,000) in total from various P2P platforms, with a cap of 200,000 yuan from a single platform. The maximum companies or organizations can borrow from several platforms is 5 million yuan, including a ceiling of 1 million yuan from one site.
The Internet finance sector, which has experienced a rapid rise in recent years, has been plagued by defaults and fraud, and the regulations aim to end such problems, said the regulation.
As of the end of June, there were 4, 125 online lending platforms in China, with online loans from P2P companies totaling 621.3 billion yuan, the CBRC said. And "problematic" online lenders reached 1,778, or 43.1 percent of the total.
