View photosMoreChinese 100 yuan banknotes are seen in a counting machine while a clerk counts them at a branch of a commercial bank in Beijing, China, March 30, 2016.
REUTERS/Kim Kyung-Hoon/File Photo
BEIJING Reuters - China's government has approved a plan to clean up the country's online financial sector, according to people with direct knowledge of the matter, including rules to limit the activities of P2P lending firms, the source of recent fraud scandals.
It outlines stricter rules for peer-to-peer P2P platforms, where lending quadrupled last year to 440 billion yuan $67 billion , according to Citigroup research, forbidding them from holding clients' capital in-house.
"Good platforms welcome government regulation for a simple reason: without good rules, bad players push out good players," said Wang, adding a lack of regulation forced all platforms into unfair competition.
Last month, police arrested 21 executives at Zhongjin Capital Management - a high-profile Shanghai-based platform that promised retail investors double-digit returns for short-term projects - accusing them of "illegal fundraising."
The government is also calling for the establishment of a centralized registration system for Internet financial products and a unified platform for Internet bank accounts.