Chinese fintech firm Lufax has decided to scale down its peer-to-peer (P2P) lending business to meet regulatory requirements, reported South China Morning Post.
The company refuted Reuters’ story which said that the company was planning to exit from the P2P business altogether.
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Also known as Shanghai Lujiazui International Financial Asset Exchange, Lufax will make necessary cuts to comply with regulatory requirements.
The company is required to trim its P2P loan amounts, workforce and P2P outlets.
Established in 2011, Lufax is an associate of China Ping An Group. In the last two years, the company concentrated on bolstering its wealth management services, though P2P lending continued to remain one of its core businesses.
In P2P lending, companies procure funds from investors and loan it to small businesses and individuals.
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By GlobalDataLufax now plans to apply for a consumer lending licence, a source familiar with the matter told South China Morning Post.
After its last funding round at the end of last year, Lufax was valued around $39.4bn.
The move to downsize Lufax’s P2P lending comes at a time when China has tightened laws governing financial industry following a series of frauds.
In the last three years, China has cracked down on several such P2P platforms owing to irregularities.
In May this year, Chinese regulators took over Baoshang Bank due to growing credit risks.
