(Yicai) Feb. 27 -- As Ali Xiaodai, China’s first internet-based provider of small loans, is wound up, e-commerce merchants can turn to another online lender, MYBank, a person familiar with the matter told Yicai.

Ali Xiaodai, the predecessor of Ant Group-backed MYBank, has had no operations since 2022, the source said. On Feb. 6, the fintech company that is in the process of being dissolved applied to deregister with the local market regulator in the city of Hangzhou, according to the National Enterprise Credit Information Publicity System.

Founded by Alibaba Group Holding and external shareholders in March 2010, Ali Xiaodai was the first company in China to be approved to lend small amounts of money to e-commerce merchants. It had CNY300 million (USD41.7 million) in registered capital, and Alibaba founder Jack Ma owned 20 percent of the company.

With tighter government regulation of shareholder participation, leverage ratios, and cross-regional expansion, the size and number of China’s microfinance firms has shrivelled in recent years.

China had 5,500 micro lenders as of Dec. 31, and at CNY762.9 billion (USD106 billion) their loan balance was 16 percent smaller than the year before. Their headcount has also dropped to 48,000. The last peak was in 2015 when more than 8,950 firms had lent CNY959.4 billion and employed over 114,000.

Analysts told Yicai that the sector’s shakeout rumbles on, with the ranks of micro lenders continuing to be thinned out.

Editor: Emmi Laine