Fraud warning on P2P lending platforms
Print Edition
INVESTORS should be wary of fraud risks from online peer-to-peer lending platforms ahead of the Chinese New Year festivities in February when demand for cash is expected to be high, an online finance service platform said yesterday.
In the 12 months till October, 184 P2P firms were found to have problems such as executives disappearing unexpectedly with huge sums of investors’ money, according to Rong360, which released a report on China’s online finance market.
“Some lenders will find difficult to return money to investors near the end of the fiscal year,” said David Ye, co-founder and CEO of Rong360. “That will cause more P2P lending platforms to collapse.”
P2P lending platforms bypass banks and match borrowers and lenders directly for small loans ranging from a few thousand yuan to several million yuan. Compared with other personal wealth management products, P2P offers high investment return of 10-20 percent annually but it also brings higher risks.
Despite the risks, the sector still draws capital.
Shanghai-based Dianrong.com said yesterday that it has lured capital from Tiger Fund which made its first investment in the Chinese online finance sector.
There were 1,184 registered P2P lending platforms at the end of June on China’s mainland, whose transactions totaled 81.8 billion yuan (US$13.2 billion), according to nonobank.com, a Shanghai-based P2P lender.
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