(Yicai Global) Nov. 03 -- Chinese authorities are mulling upping their supervision of payday loan platforms and shutting down and banning those implicated in illegal activities in response to a rising chorus of allegations that some such companies charge unreasonably high interest rates, an insider said today.
The American Depositary Receipt (ADR) price of online peer-to-peer (P2P) lender Qudian Inc. (NYSE:QD) slumped on the New York Stock Exchange in consequence, marking a downturn following a 22 percent surge in the previous two trading days.
The company's stock price dived by 6.6 percent to USD25.27 at 4:00 pm yesterday, world.ifeng.com reported. The high-profile of Qudian Inc.'s US listing last month was a major factor motivating these prospective regulatory measures, the insider said.
Scrutiny of payday loan companies will center on whether they have committed such illegal acts as usury, unlawful collection of deposits and strong-arm loan collection practices and whether they illegally collude with financial institutions. Those involved in illegal activities may be shut down and banned from the sector. The interest rate of a loan may not exceed 36 percent per Chinese law, the insider noted. Regulators may draft relevant supervisory regulations on microfinance, including setting upper limits on its rates.