China has issued new guidelines for internet financing firms, in a bid to tighten its grip on the sector, minimise loss and support innovation.
The move comes amid criticism that the online platforms have contributed to an equities plunge that wiped $3trn off the market.
The new rules require client funds to be parked at established banks, and online financing platforms to offer more disclosure and send risk reminder to customers more regularly.
Under the new rules, peer-to-peer lending websites – which match borrowers with lenders – would now act only as intermediaries and will be restricted from "enhancing borrower credit worthiness" or raising funds illegally.
Online payments will now be supervised by the central bank, and online lending and peer-to-peer platforms by China Banking Regulatory Commission.
Crowdfunding and the online sales of funds will be monitored by the China Securities Regulatory Commission.
