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[SHANGHAI] China's central bank said Friday that firms involved in Internet finance had set up an industry association, as authorities try to get a handle on the rapidly growing but weakly regulated sector.
The group will seek to "self-regulate" the industry at a time of growing risk from Internet financing, according to a transcript of a speech by a People's Bank of China (PBoC) official at the opening ceremony.
Its establishment followed revelations last month that a well-known peer-to-peer (P2P) lending firm called Ezubao had bilked 900,000 investors out of US$7.6 billion in what a company executive called a "Ponzi scheme".
The Shanghai-based industry association groups online payment providers, P2P lenders and other Internet finance entities, PBoC deputy governor Pan Gongsheng said, according to the transcript posted on the central bank website.
"We must fully understand that Internet financing institutions lack familiarity with risk," Pan said.
He added many were unaware of the need to abide by regulations, protect consumer rights, oppose money laundering or combat financing for terrorism.
"Industry self-regulation is beneficial and strongly supports administrative supervision," he said.
Members of the new industry group include major banks and financial firms, as well as P2P lenders and retailers with online sales, reports said, among them Bank of China and P2P giant Lufax, which is linked to financial Ping An Insurance Group.
China has nearly 2,600 platforms described as P2P businesses, according to industry website, with transactions valued at around $150 billion last year.
Online and mobile payment services are dominated by e-commerce giant Alibaba, with nearly three-quarters of the market, followed by Tencent - operator of the popular messaging app WeChat - which has some 17 per cent, according to Beijing-based BigData Research.
But Tencent is keen to expand in the area while US technology giant Apple recently entered the market by launching Apple Pay.
Pan said Internet financing could boost efficiency, lower costs and introduce more channels of funding.
Small, private firms especially have looked online for financing as many are shut out of the state-dominated banking system.