Rising fraud risk forces AgBank to act
Print Edition
The Agriculture Bank of China has decided to stop third-party payment companies from using the bank鈥檚 online channel to link to peer-to-peer lending platforms amid rising risks of fraud, according to the payment companies.
AgBank鈥檚 move came after the exposure of several major frauds, including that of Ezubao, which highlighted the risks and defaults of an unregulated P2P sector. Ezubao is being investigated by police for suspected illegal pooling of public deposits of over 40 billion yuan (US$6.1 billion) from investors.
AgBank cautioned in a January 22 notice to payment companies that customers of some P2P platforms had faced difficulties in withdrawing cash.
鈥淎s some third-party payment institutions provide the bank鈥檚 online transaction channels to P2P platforms, the risks had started spreading to the bank and caused significant negative impact,鈥 AgBank said.
Third-party payment companies including Ebaotong, YeePay and ChinaPNR had closed the channels by Tuesday, according to notices posted on their websites yesterday.
The authorities had launched several crackdowns to tighten the P2P industry since December. A draft regulation published by the China Banking Regulatory Commission last month requires the P2P platforms to be 鈥渓imited to roles as intermediaries between lenders and borrowers.鈥
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