BEIJING, Dec 5 (Reuters) - China's central bank will closelymonitor the development of Internet financial services to ensurecompanies do not cross any legal red lines, a senior centralbank official said on Thursday.
Internet financing and traditional banking servicescomplement each other, Liu Shiyu, a vice central bank governor,said in a speech published on the central bank's website,www.pbc.gov.cn.
"We will encourage internet financial innovations andtolerate mistakes. But we will not tolerate fraud and othercriminal activities," Liu said.
Financial scams have multiplied in China as individualwealth grows, while a lack of financial knowledge and educationmeans many people do not know how to protect their money.
Concerned at the potential for trouble, the governmentlaunched a crackdown on advertisements for financial scams inAugust, while a separate campaign against pyramid schemes begun in June led to the arrest of 560 people,according to the Ministry of Public Security.
China's finance sector has been dominated by state banks,who traditionally focus on larger companies over the needs ofsmaller firms and individuals, leaving few options.
But Internet companies, including Alibaba Group Holding Ltd , Baidu Inc and Tencent Holdings Ltd, have started using their platforms to push financialproducts developed by finance management firms, looking to fillthis gap in the market.
Retailer Suning Commerce Group Co Ltd has alsomoved into Internet finance, while Ping An Insurance Group Co ofChina and China Minsheng Banking Corp have both been collaborating with Internet companies.
Alibaba's fund sales platform Yu E Bao, or "leftovertreasure", is this year's most successful fund launch in China,attracting more than 100 billion yuan in funds under managementand more than 30 million subscribers as of 15 November.
Liu said Internet companies "cannot engage in illegalfund-raising activity, cannot take public deposits illegally -these are two legal 'red lines' they cannot touch." He did notelaborate.
Liu added that peer-to-peer (P2P) companies cannot set up"fund pools" and cannot make loans or provide guarantees forother borrowers at the same time. He did not elaborate.
The central bank will team up with other financialregulators and the police to crack down on fraud and othercriminal activities on the internet, Liu said.
- Liu Shiyu
- central bank
- Internet companies