Chi­nese bank­ing reg­u­la­tor vows to get tough on on­line bro­kers

The Pak Banker - - COMPANIES/BOSS -

BEI­JING: China's top bank­ing reg­u­la­tor has vowed to crack down on il­le­gal fundrais­ing ac­tiv­i­ties by un­scrupu­lous on­line bro­kers and warned in­vestors to be wary of their schemes. Shang Fulin, chair­man of the China Bank­ing Reg­u­la­tory Com­mis­sion, said at a news con­fer­ence on Satur­day: "The CBRC will strengthen regulation, in­ten­sify on-site in­spec­tions and step up ad­min­is­tra­tive penal­ties."

Shang said il­le­gal fundrais­ing cases have be­come so com­mon and the per­pe­tra­tors are find­ing new ways to com­mit their crimes. The on­line peer-to-peer lend­ing bro­ker Ezubao, for in­stance, has been ac­cused by po­lice of col­lect­ing more than 50 bil­lion yuan ($7.7 bil­lion) il­le­gally from about 900,000 non­spe­cific in­vestors through fake projects.

The com­pany al­legedly lured its vic­tims into the scheme un­der the guise of P2P lend­ing, which is the prac­tice of lend­ing money to in­di­vid­u­als or busi­nesses through on­line ser­vices that match lenders di­rectly with bor­row­ers.

"Rel­e­vant govern­ment de­part­ments have put the case on file for in­ves­ti­ga­tion. They are seek­ing as­set re­cov­ery to re­coup as much losses as they can," Shang said.

Caixin Me­dia ear­lier re­ported that ac­cord­ing to its cal­cu­la­tion, the amount of money col­lected via il­le­gal fundrais­ing reached a stag­ger­ing 200 bil­lion yuan last year.

By the end of March 2015, in­ves­ti­ga­tors had filed 14,000 fi­nan­cial crim­i­nal cases, up nearly 38 per­cent year-on-year, re­ported the Bei­jing-based me­dia group spe­cial­iz­ing in busi­ness news. Shang said: "The CBRC will also step up over­sight of P2P lend­ing and launch spe­cial projects along with other govern­ment de­part­ments to ad­dress prob­lems arisen from In­ter­net fi­nance."

He re­minded in­vestors they have to be ex­tremely cau­tious about par­tic­i­pat­ing in fi­nan­cial in­vest­ment schemes.

"They should pay spe­cial at­ten­tion to three el­e­ments be­fore mak­ing in­vest­ment de­ci­sions: First, whether or not a P2P lend­ing plat­form is rais­ing funds from non­spe­cific in­vestors. Se­cond, whether or not it has promised to of­fer ab­nor­mally high re­turns on in­vest­ment. Third, whether or not it ad­ver­tises pub­licly for fundrais­ing," he said. By the end of Fe­bru­ary, a to­tal of 2,519 P2P lend­ing plat­forms op­er­ated in the coun­try with­out any prob­lems, ac­cord­ing to wang­daizhi­, a Web por­tal that tracks the in­dus­try.

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