More approvals needed to register finance companies
April 25, 2016 Category Finance, Weekly
Chinese authorities are suspending new registrations of finance companies. Applicants with finance-related names or businesses would not be able to register via local branches of the State Administration for Industry and Commerce (SAIC). The companies first need to get approvals from financial regulators. The Administration has also started targeting “financial” companies involved in illegal activities such as illicit public fundraising, loan sharking schemes and defrauding investors via online peer-to-peer platforms. Law enforcement authorities, including police, have already teamed up with business-registration authorities to raid some of the illegal operations. The decision to suspend approvals comes after a string of failures of P2P operators and asset management firms since late last year. The firms were alleged to have illegally taken deposits or defrauded investors. Victims of the biggest scam so far, run by a P2P platform called Ezubao, took to the streets and protested, saying the authorities turned a blind eye to the schemes until state financial regulators and law enforcement authorities became aware of the risks from the business failures. Police are expecting a large number of defaults from the illegal private lending and wealth management sector in the middle of this year as due dates for payments fall.
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