Registration of Internet finance firms suspended in many cities

Administrations for industry and commerce in Shanghai and Shenzhen have suspended the registration of Internet finance platform, the Beijing Business Today reported Monday.

The Administration for Industry and Commerce in Shanghai has suspended the registration of Internet finance companies from Jan 4. Registrations which include finance and outsourcing in business scope will not be approved, the newspaper reported.

Furthermore, the Administration for Industry and Commerce in Beijing also released a similar statement. However,this has not yet been confirmed by the administration.

The moves came just two weeks after the government started to elicit public opinion on the first regulation for peer-to-peer lending and other relevant platforms to prevent financial risks and better safeguard the safety of the lenders.

It imposes 12 restrictions on P2P lending companies, prohibiting them from accepting public deposits, pooling investors' money to fund their own projects, or providing any kind of guarantee for lenders.

"The attitude change of local administrations toward Internet finance registration reflects a high risk exposure in the industry," the newspaper quoted Li Zichuan, chief information officer of peer-to-peer lending data provider wd315 as saying.

"The suspension will help related departments sort out existing risk exposure and prepare for a file. However, it will not have a big effect on the registration value of existing Internet finance platforms."

P2P lending, which is done without a traditional financial intermediary such as banks, has seen rapid development since 2007.

At the end of November, there were 2,612 P2P lending platforms in normal operation and 1,157 others with problems, according to statistics released by wdzj.com, a website focusing on P2P lending research.