China's credit system to cover P2P lending in tightening regulation

China's central bank will include peer-to-peer (P2P) online lending firms in its credit reference system in a move to crack down on irregular practices.

P2P lending platforms in operation will provide certain information such as online lending interest rates to credit reference agencies such as operators of financial credit information basic databases and Baihang Credit, China's only licensed and market-oriented personal credit agency, according to an official guideline.

For those out of operation, their credit information will still be collected. The collection, storage, processing and use of credit information of all the P2P lending platforms will be conducted in line with related laws and regulations.

P2P lending defaulters might face higher loan interest rates and limits on loan and insurance services, the guideline said.

China has tightened its regulation of the online lending market in recent years to forestall financial risks.

Industrial data showed that the country's P2P online lending sector continued to shrink in size and transaction volume in August, with about 700 platforms in operation, falling by about 50 percent year-on-year.