Date
20 September 2017
P2P financing has become popular in China over the last two years, but the risks have also grown. Photo: cnfina.com
P2P financing has become popular in China over the last two years, but the risks have also grown. Photo: cnfina.com

Another P2P lending platform goes kaput in China

Wangjinbao, a Beijing-based peer-to-peer (P2P) lending platform, is said to have done the vanishing act in just four months since it announced its establishment and raised millions of yuan of capital, a mainland media report said, sparking fresh worries about the risks in China’s shadow banking sector.

The P2P platform has lured total investment of over 5.14 million yuan involving 109 investors from all over the country, China National Radio reported Monday. The website, which claimed to offer high return and 100 percent investment guarantee, was found recently to be shut down.

Wangjinbao matches individual borrowers and lenders directly online. One investor surnamed Zhang said he invested in deals that involved a loan to a winemaker, lending to a big car rental firm and even utility projects of a municipality in Jiangsu province, the report said.

He invested more than 300,000 yuan in these projects since May, and one of his friends put 220,000 yuan in projects promoted on the platform. All the projects claimed to offer an annual return of 18 to 20 percent, and investors were promised that they can monitor their investments online on a daily basis, the report quoted Zhang as saying.

P2P lending has grown rapidly in recent years as part of the informal sources of credit used by China’s smaller companies that typically have little access to the traditional banking system.

Loans issued through P2P platforms reached 68.03 billion yuan in 2013, about three times the 22.86 billion yuan in 2012, according to data from iResearch, an Internet research and consulting firm.

There are nearly 1,000 P2P websites employing over 200,000 people. However, over 40 such P2P websites have shut down or gone bankrupt during September and November last year, the report said.

– Contact us at [email protected]

JZ/JP/RC

Freelance journalist

EJI Weekly Newsletter

Please click here to unsubscribe