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Central Bank to Release Guidelines for Internet Finance

Central Bank to Release Guidelines for Internet FinanceChina internet finance will be releasing guidelines that were drafted by the central bank together with other financial regulators. This guideline is seeking to promote the healthy development of internet finance which was been already reviewed and approved by the State Council and China’s cabinet and is scheduled to be released soon.

Internet finance is used as a catch all term in China that refers to loans, investment and other financial services that is provided through online channels rather that passing through regular banks and other financial institutions. The guidelines will further encourage innovation in the internet finance and will lay out measures that will ward off any potential risks and at the same time ensure fair competition and protect legitimate rights of investors. Internet finance is a fast growing and has diversified offerings in the financial sector that can address the financial needs of small and micro firms and those companies in the countryside.

In the past couple of years the internet was increasingly becoming a new channel in connecting investors with lenders that were under served by Chinese banks. The internet has also become the most popular sales channel for a wide range of wealth management products ranging from money markets funds to investing in the stock market and to borrowing money.

Authorities are recognizing internet finance as a compliment for traditional financial services and for allocating resource funds much more efficiently. Authorities also warned of risks such as defaults, fraud, and risk controls.



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