P2P firms in dock as scrutiny tightens

Tighter scrutiny by financial regulators could lead to another shakeout in China's fiercely competitive peer-to-peer (P2P) lending sector and delay the issuing of formal business licenses by a year or two, experts said.

The number of P2P firms, the fastest growing business in the internet finance sector, has decreased to nearly 1,800 by June from a peak of more than 5,000 in 2014, after a two-year rectification storm to curb illegal lending.

A special working group organized by the country's banking regulator had set a deadline, from August 2016 to the end of June this year, to crack down on unconventional and risky internet finance companies, or especially the peer-to-peer online lending companies. During that period, no new online lenders got the green light for starting the business.