The China Banking Regulatory Commission (CBRC) unveiled aggressive measures to restrain the country’s fast expanding peer-to-peer (P2P) lending sector, warning that almost half of the 2,349 online lending platforms are “problematic”. The USD93 billion P2P lending sector has been a source of funds for individuals and small businesses overlooked by the country’s traditional financial services institutions that prefer big borrowers with better credit history and collateral. But China’s approach to promote the sector as a form of financial innovation has led to a rash of high-profile P2P failures, scandals and frauds. Some P2P firms are running Ponzi schemes and raising funds illegally. Under new rules, an individual can borrow up to a maximum of CNY200,000 from each P2P platform, with a maximum of CNY1 million, the CBRC said. Corporate borrowers face a ceiling of CNY1 million from each P2P site and a limit of CNY5 million. The new rules bar online lending platforms from taking public deposits or selling wealth-management products. They require P2P sites to appoint eligible banks as custodians and improve their information disclosure. The regulations also ban P2P firms from providing guarantees for investment principal or returns, a common marketing practice to lure funds from unsophisticated retail investors. New companies with internet-finance related names are banned from registration in Beijing, Shanghai and Guangzhou. China’s P2P industry extended CNY982 billion in loans in 2015, almost quadruple the amount in 2014 and a 10-fold jump from 2013, according to Online Lending House. James Zheng, Chief Financial Officer at Lufax, the number one P2P lending platform in China, said the 3,000 P2P companies probably will be consolidated into 200-300 by this time next year, the Shanghai Daily reports.