China announced rules to tighten regulation of the national $60 billion P2P lending industry, with a document issued by the Ministry of Public Security, China Banking Regulatory Commission (CBRC), the Ministry of Industry and Information Technology, and the Cyberspace Administration of China. The new regulations took effect on August 24, 2016, but platforms now have one year to adapt their practices according to the framework.
This is the first comprehensive framework for regulating P2P lending in China, an industry that has seen a huge growth in the past few years, along with some issues with risk management and fraud. According to Bloomberg there were a total of 982 billion yuan ($147 bn) of loans in 2015, with a 400% increase on the year before and approximately 10 times more than in 2013. The market attracted over 3.4 million investors and 1.15 million borrowers in July 2016.
With the new rules a single person can borrow a maximum of 200,000 yuan ($30,000) from a platform and a total of 1 million yuan ($150,000) in aggregate from different P2P platforms). For corporations the caps are five times higher, with the opportunity to borrow 1 million yuan ($150,000) on a single platform and 5 million yuan ($750,000) in aggregate.
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