Dec 21, 2020

(Yicai Global) Dec. 21 -- Tech firms such as JD.Com, Baidu, and Tencent Holdings have stopped accepting new clients for their internet deposit products after Ant Group did the same on Dec. 18 to comply with China’s tightening fintech regulations. JD.Com’s JD Digits, Baidu's Du Xiaoman Financial, Trip.Com's Ctrip Finance, and Ping An-backed Lufax each said over the weekend that only clients who have used their platforms to deposit money at banks via such interest-bearing time deposit products can continue to hold such assets. The firms said they will continue to pay close attention to new fintech regulation and strictly abide by the rules. Third-party platforms have not secured regulatory approval to carry out this type of business so they should remedy the situation after clear rules are introduced, Zheng Lei, director of the International New Economic Research Institute's digital economy center, told Yicai Global. Some lenders offered internet deposit products on mobile wallets in recent years to attract new clients with high interest rates. The minimum deposit is as little as CNY50 (USD7.60) and the lockup period ranges from one to five years. With such products, small and mid-sized banks in particular have been able to ease their liquidity pressures. But regulators have said that rural commercial banks should focus on serving their local areas. It is very important to clarify which types of banks can and which cannot run such a business, Sun Tianqi, head of the central bank's financial stability bureau, said earlier this month. Because these deposits are different from savings account deposits, the related business should follow its own risk management rationale, he added. Editor: Emmi Laine