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BEIJING (Reuters) - Chinese authorities are planning to tighten regulation of its fast-growing internet finance industry and crack down on illicit transactions, state media reported on Saturday, as the country works to rein in fraud on its online lending platforms.
China's unregulated online peer-to-peer (P2P) industry has been dogged by reports of fraud in recent years, underscoring growing financial risks and increasing the potential for social unrest.
More than 1,200 P2P firms operating in the sector are in trouble, either running away with investors' money or closed down, according to industry data provider Wangdaizhijia. The country has almost 3,800 such firms, who do 133.1 billion yuan ($21 billion) worth of business.
Chinese police have detained suspects at Ezubao, the country's largest P2P platform by lending figures, law enforcement authorities said in December. Ezubao could not be reached by telephone for comment.
Authorities will work with bank regulators to set up a warning system for financial risks and facilitate sharing of information between regions and departments, the official news agency Xinhua reported, citing a statement from a government conference on political and legal work that ended Saturday.
Loans, investments and other financial services done online qualify as internet finance, Xinhua said. Authorities will crack down on law-breakers and work to better educate the public of risks, the newswire said.
Reporting By Megha Rajagopalan