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Risks abound in online investing
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Customers investing in financial products sold by Internet companies should be aware of legal and money safety risks, the deputy governor of China’s central bank cautioned.
Liu Shiyu, deputy governor of the People’s Bank of China, said Internet fund-raising, especially peer-to-peer lending, may be violating laws by taking public deposits due to a lack of clear legal definitions.
“The bottom line is that Internet financial organizations cannot illegally take public deposits, and that they cannot conduct illegal fund-raising,” Liu wrote in a commentary in a financial magazine by published Tsinghua University.
But he also said that although innovative development of Internet finance is supported, “we will never allow them to touch the bottom line.”
Liu warned that owners of online financing platforms may abscond with people’s investment as there are no third-party deposit rules.
But he said the authorities will allow time for the sector to develop, tolerate small mistakes and support exploration of new business models as long as risks are manageable.
Liu’s comment was made amid news that financial regulators are drafting rules on Internet financing, including lending, sales of monetary funds, and virtual currencies.
The China Banking Regulatory Commission has submitted plans to the State Council that may standardize online and offline financial practices, the China Business News said.
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