On P2P lending:Guidelines on custody of funds from online lending

Updates from 8/14/2016: China Banking Regulatory Commission recently issued to banking institutions a draft guideline for comments on regulating custody of funds from online lending. The guideline specifies banks responsibilities in taking custody of marketplace loans. Banks will be prohibited from outsourcing their customer due diligence duty by having online lending institutions and third party payment institutions open accounts. Thus, it will render joint custody of funds de facto impossible. Custodian banks are also required to disclose on designated websites about the deal size, bad loans ratio, overdue rate and number of customers. So the regulators take a “detour”: instead of denying licenses to “sanitize” the industry, they set a high barrier of entry via prudential regulation. See http://finance.sina.com.cn/china/jrxw/2016-08-14/doc-ifxuxnpy9529896.shtml

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