China Online Finance Regulator Tells Unqualified Micro-Lenders to Stop Lending
The National Internet Finance Association of China issued a risk warning letter late on Friday telling “unqualified institutions” to immediately stop offering loans as Beijing steps up a crackdown on the micro-loan sector to fend off financial risks.
The 1 trillion yuan ($151.5 billion) short-term, unsecured lending sector, known as “cash loan” in China, has been accused of charging exorbitant interest rates and violent debt collection practices.
In Friday’s warning letter, the Internet Finance Association, a government-backed industry group, said the unqualified micro lenders are disrupting economic and social orders and must stop lending immediately.
“Some institutions are not qualified to issue loans but have used false promotion to attract clients, conduct violent debt collection, and charge extremely high interest rates and fees, causing financial risks and social problems in some regions,” it said in the letter released on its website.
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