China weighs setting up bad-debt managers for failed P2P lenders
- At their peak, China’s peer-to-peer lenders had almost 50 million investors and US$150 billion in debt outstanding
China’s banking regulator is considering setting up new regional bad-debt managers to help clean up risks after the failure of thousands of peer-to-peer (P2P) lending platforms, according to people with knowledge of the matter.
Companies in Shanghai, Zhejiang and Shenzhen have submitted applications to set up local asset managers dealing with bad loans, especially those from online lending platforms, said the people, asking not to be identified discussing a private matter.
The China Banking and Insurance Regulatory Commission (CBIRC) has yet to approve the applications, the people said.
A two-year push to clean up China’s P2P sector, plagued by fraud and defaults, has led to the failure of more than 2,000 online platforms. At their peak, they had almost 50 million investors and US$150 billion in debt outstanding.
Policymakers now have added impetus to clean up the bad debt, as the outbreak of the deadly coronavirus threatens to further depress economic growth.