With internet finance expanding at a rapid pace in China, there are growing calls for regulating the business to curb potential risks. Industry observers are arguing that the internet finance firms should be subject to the same deposit rate cap and reserve requirements as traditional lenders.
Their funds should be considered general deposits, some experts told China Business News. The calls come as e-commerce and internet giants such as Alibaba Group and Tencent Holdings are muscling their way into businesses that had long been the preserve of traditional banks.
Alibaba Group operates Yu’E Bao, a money-market type fund that has become the No. 1 in the field in less than a year and has become the envy of banking players.
The China Banking Association, an industry group backed by the China Banking Regulatory Commission, held a meeting with some banking industry leaders to discuss a self-policing system for deposit-taking companies, China Business News said in a Thursday report.
Deposits held by internet finance companies should be treated as general deposits, not interbank deposits, to maintain order in the banking sector and ensure the safety of the nation’s financial system, industry leaders were quoted as saying.
At present, Alibaba is not required to set aside reserves and is not subject to a deposit rate cap on its Yu’E Bao accounts.
Since its launch in May, Yu’E Bao has attracted 400 billion yuan (US$65.36 billion) of deposits. It offers an annualized interest rate of 6 percent on seven-day deposits and longer.
Xi urges united plan for Beijing-Tianjin-Hebei area
President Xi Jinping said Beijing and Tianjin municipalities and Hebei province should coordinate their development in the interests of national strategy, the environment and better use of economic resources, Xinhua news agency reported Friday. At a seminar Thursday, Xi said several tasks, including clear planning and market integration, are necessary to achieve the goal. More than 100 million people live in the area, which covers 216,000 square kilometers.
Guangdong SOEs absorb 50 bln yuan private capital
Ten state-owned enterprises in Guangdong province have introduced a combined 50 billion yuan (US$8.2 billion) of private capital as part of their restructuring, the China Securities Journal reported Friday, citing the local government. Another 100 billion yuan will be pumped into 54 other provincial state-owned projects this year, covering 13 industries like transport, communications, construction materials, power, tourism, real estate, finance, information technology as well as health and medical care, it said. Guangdong deputy governor Xu Shaohua was quoted as saying that the province aims to diversify the shareholding of over 80 percent of SOEs by 2020.
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