Alipay, a subsidiary of Ant Group, suddenly pulled all online deposit products from its shelves on Monday.
Ant Group, China’s largest online financial institution, continues to face a crackdown. Chinese media reported that Alipay pulled all Internet deposit products from its shelves Tuesday without warning after it was accused of illegal financial activities involving “unlicensed driving.” Except for those who already hold bank deposit products, bank deposit products can no longer be seen on the Alipay finance page for those who have not yet made online deposits, the Beijing Business Daily said.
In response, Ant Group said that in accordance with the regulatory authorities’ regulations on the Internet deposit industry, all Internet deposit products on ant platform have been removed from the shelves and are only visible to users who have purchased the products, while those who hold the products will not be affected.
Ant Group reiterated that it will earnestly implement relevant regulations and requirements, and use scientific and technological means to better support financial institutions and serve the real economy.
China Fund News said Internet deposit products have attracted many investors in the past by selling “high interest on capital preservation”. In mainstream jingdong, degree of grain full, pay treasure to third party platform, increase in the number of Banks failing last cooperation, cooperation bank types are constantly expanding, from the most early is only several private Banks on sale in the third party Internet channel innovation savings products, currently has expanded to the bank and city firms, large Banks.
Although China’s supervision organs has several degrees, the shelves of some current high-yielding products, but as a result of Internet products one-year deposit rate up to 2.25%, 3-4.125%, 5-4.875%, most of the deposits the minimum amount of products is only 50 yuan, and allow the premature termination of withdrawal at any time, funds to the account, usually can therefore attract a lot of Chinese people.
However, sun Tianqi, director of the Financial stability Bureau of the People’s Bank of China, said Thursday that more than two years after banks launched deposit products on Internet finance platforms, such financial services are illegal activities involving “unlicensed driving” and should also be brought under financial supervision.
Sun Tianqi said that provides a platform for customers to purchase deposit product purchase interface, a strong platform to further involved in the management of banking products and services, customers (including large Banks) in the bank channels (such as online banking, mobile banking, etc.) to query the account and products and trading, is only allowed in operating platform, the platform has become a service online bank branch, no related business financial license plate, this kind of platform free financial regulation, the essence of which is “driving without a license to conduct financial business,” illegal financial activities.
Sun added that some banks have raised the interest rate of online deposit products by shortening the period of interest payment or issuing interest coupon and cash reward, which directly breaks the upper limit of the self-regulated interest rate pricing mechanism.
In addition, some high-risk banks absorb deposits through Internet platforms to maintain the operation of risky assets with seemingly stable and unstable sources of funds, further aggravating their own risks. At the same time, the cross-regional nature of platform deposits increases the spillover of risks and the difficulty of disposal.
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