(Yicai Global) March 12 -- Zhuhai Mi Credit Instant Loan, Chinese technology giant Xiaomi's payroll loan provider in southern Guangdong province, has dissolved as the microfinance sector is shrinking due to tighter regulation.

Zhuhai Mi Credit deregistered on March 7, and the once lucrative cash advance sector has entered a recession, the National Business Daily reported yesterday. 

Zhuhai Mi Credit was launched in August 2017 with a registered capital of CNY300 million (USD44.6 million). Lei Jun, Beijing-based Xiaomi's founder and chief executive, is the executive director of the lending unit. 

Chinese regional regulators have started to rein in the payroll loan sector that targets farmers as well as small and mid-sized businesses. Central Henan province disqualified 18 unsecured loan providers in January. The Sichuan Association of Microfinance announced last May that 25 related firms have been suspended for rectification and another 45 have been disqualified.

The number of payday loan agencies dropped 5 percent annually, the related staff declined by 13 percent and the outstanding loans slumped by CNY24.9 billion (USD3.7 billion), down almost 3 percent, by the end of last year, the National Business Daily report added. The slide has continued for three consecutive years. 

Editor: Emmi Laine