SHANGHAI, March 25, 2016 /PRNewswire/ -- Guo Yuhang, Founder and Co-CEO of Dianrong.com, has offered comments on the newly-established China Internet Finance Association (CIFA or "the association").
The CIFA is the highest-level national industry self-regulatory organization to date. It was established by the People's Bank of China (PBOC), China's central bank, based on requirements that were laid out in the "Directional Opinion to Promote the Healthy Development of Internet Finance" communique published by the ten Ministries of the State Council.
The charter of the association includes establishing industry standards and operational rules by sub categories, promoting information sharing and communication within the industry, defining self-regulatory content and penalty mechanisms, and strengthening the legal and compliance culture of the industry.
Members of the CIFA include financial institutions such as banks, securities companies, funds, insurance companies, trusts, consumer finance companies, as well as other institutions such as guarantee companies, credit services, financial infrastructure companies, and other internet companies including P2P companies. There are 437 members of the association, with 142 companies putting forth candidates for executive directors. After a vote at the association's inaugural meeting, 48 companies were elected to the role. Less than 10% of the elected executive directors are currently at or own a P2P platform. Dianrong.com was the only P2P lending company elected to an executive directorship. Lufax, CreditEase, and Wangxin, categorized as comprehensive internet finance companies, were also elected.
According to Guo Yuhang, The fact that the P2P category is included among the leadership roles of the association demonstrates that the government and mainstream regulators recognize the importance of the P2P lending industry. However, the low level of representation, less than 10% of executive directors, also reflects regulators' conservative approach towards the industry.
"4 executive directors out of thousands of P2P companies in China was a very selective ratio. We consider it to be a great honor to have been included, and recognize the responsibility of being a role model for the industry, especially along the principles of compliance and technological advancement," Guo said.
Guo continued, "Dianrong had the opportunity to grow a multi-billion dollar loan book in the past couple of years, but we decided not to do so. Regarding compliance, we always stick to two principles: first, to proactively interact with regulators, the same way Lending Club did in the US during the early development stage of the industry; second is to put compliance as the highest priority during internal operations, maximizing information disclosure while protecting consumer privacy. Beyond that, we fundamentally believe in using technology to achieve the compliance and consumer rights protection. For instance, recently we invested a significant amount of resources in researching the adoption of block chain technology into internet finance, as it could solve a lot of transparency, information disclosure, and fraud issues within the P2P industry.
"This association is organized by the central bank, and registered as a "national Level One association" under the Ministry of Civil Affairs. We've heard that there are 40 PHD-certificate holders among the staff of this association," Guo said.
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