Lufax Holding, one of China’s largest online lenders, is poised to establish a new consumer finance business, as the company restructures its online lending business to scale back its once high-flying, but controversial, peer-to-peer (P2P) lending business.
Lufax, controlled by financial titan Ping An Insurance, has been approved by China’s banking and insurance regulator to set up a consumer finance business, according to a statement released by China Banking and Insurance Regulatory Commission last week. Consumer finance businesses usually lend to consumers for the purchase of products or services when they are unable to pay in cash or with a credit card.
The move comes after Chinese regulators overseeing the country’s internet finance sector said they would allow a small number of P2P lenders, with sufficient capital and professional management capabilities, to apply for licenses to branch out into consumer finance and online micro-lending. In China, P2P lending businesses are generally subject to far looser regulations than the rules overseeing licensed financial institutions.
P2P lending was one of the core businesses of Lufax, but the company has begun to stop issuing new loans from its P2P lending platforms amid a regulatory clampdown which started in July, a source close to Ping An Insurance told Caixin.
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Contact reporter Tang Ziyi (email@example.com)