NASDAQ-listed Chinese internet giant Sina Corp has grabbed a license for the launch of its own micro-loan subsidiary despite a crackdown on the sector that is believed to have been a key factor in the suspension of Ant Group’s record-breaking IPO.
Sina founded Fuzhoushi Xinlang Wangluo Xiao’e Dai Co., Ltd. (抚州市新浪网络小额贷款有限公司) (Fuzhou Municipal Sina Internet Micro-loan Co., Ltd.) on 11 November, according to Chinese industrial and commercial registration data.
Sina is one of two shareholders in Sina Internet Micro-loan and holds a 99% share of equity, with Lu Jianming (卢建明) holding the remaining 1% share.
According to domestic media reports Sina Internet Micro-loan has been established on the foundation of Sina’s P2P lending platform Yi E Dai (易e贷), following the complete collapse of the P2P lending sector in China due to a crackdown by Chinese regulators.
The number of active P2P lending platforms in China has dropped to just three from over 5,000 at the sector’s peak, after regulators launched a crackdown due to concerns over widespread fraud and risk issues.
In the second half of 2019 Chinese regulators pushed for those P2P platforms that were still active in China to transition towards micro-loan and consumer finance operations.
The founding of Sina’s micro-loan subsidiary nonetheless arrives just after the Chinese central bank and the China Banking and Insurance Regulatory Commission (CBIRC) jointly issued the draft version of the “Online Micro-loan Operations Provisional Administrative Measures” (网络小额贷款业务管理暂行办法（征求意见稿）), which impose far tighter restrictions upon online lending operations.
These restrictions include limits on cross-provincial operations and leverage levels, as well as lending amounts for individual borrowers.
Chinese analysts believe moves to tighten regulation of online micro-lending in China prompted the suspension of Ant Group’s IPO on the Shanghai and Hong Kong bourses, which was originally scheduled for 5 November and expected to raise a record-breaking USD$36 billion.