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JD Digits, Baidu, Lufax remove deposit products from platforms, following Ant Group’s clean-up

Written by Wency Chen Published on     2 mins read

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Chinese regulators have been confronting the boom in digital finance this year and released torrents of new rules, designed to get a firmer grip on the country’s financial system.

Chinese online financial service providers, including JD Digits, Tencent, Baidu, Lufax, and Trip.com, have all stopped selling deposit-taking products on their platforms over the weekend after Alibaba’s Ant Group removed similar interest-bearing time deposit products last Friday in an effort to comply with the country’s tightening regulations on the fintech sector.

Apps such as JD Financial, operated by JD.com’s financial arm JD Digits, Baidu-backed Duxiaoman, Tencent’s online wealth management platform Licaitong, and Xiecheng Financial of online travel giant Trip.com, took down deposit products, which are usually provided by small and medium-sized regional banks, with higher returns and lower entry thresholds compared to larger banks.

JD Financial’s “Bank Selection” page simply reads, “Sorry, we don’t have products currently.” In response to local media, JD Digits said that existing individuals who already purchased related products won’t be impacted by the take-down. “In the future, JD Finance will pay close attention to the relevant regulatory policies and guidance and implement them carefully,” the company said.

This comes after Alibaba announced last Friday that it would no longer sell deposit products from small banks on the payment platform Alipay. On December 15, Sun Tianqi, central bank’s newly appointed financial stability director, delivered a speech at the 4th China Internet Finance Forum, pointing out that the liquidity characteristics of the product offered by third-party internet platforms are different from traditional savings deposits, which brings new issues to regulators and financial institutions.

“The proxy sales of bank deposit products on third-party internet financial platforms are illegal financial activities, like ‘driving without a license,’ which should be under financial supervision,” he said.

The deposit products sold through these platforms are all individual fixed deposits, mainly with 3-year and 5-year terms, with the highest interest rates being 4.125% for the 3-year term and 4.875% for the 5-year term, both of which are near the upper limit of the central bank’s guidelines, according to Sun. In addition, nearly half of the products have a starting deposit amount of only RMB 50 (USD 7.63) and the money can be withdrawn at any time.

Chinese regulators have been confronting the boom in digital finance this year and released torrents of new rules, designed to get a firmer grip on the country’s financial system. Regulators suspended Ant Group’s long-expected initial public offering in November before its shares were due to begin trading in both Shanghai and Hong Kong.

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