Zendai Wealth Management suspended its online lending business from Tuesday, affecting 28,000 investors who will likely get nothing back, media reported on Tuesday.
Online loan platform Laocaibao, a subsidiary of Zendai Wealth Management, suspended P2P business from Monday, according to an announcement from the platform's website.
The total amount of transactions on Laocaibao was 29.7 billion yuan ($4.2 billion) by the end of July, with a loan balance just under 5 billion yuan and 28,031 lenders, according to Laocaibao's official website.
"Is the platform overdue?"
"Do I still have my money?"
"When will the payment be made?"
Hundreds of investors on Monday afternoon rushed to the Zendai Wealth offices in Pudong New Area, Shanghai, Securities Daily reported.
Investors failed to receive a response on Monday.
"The withdrawal function remains normal. According to the repayment time, the first repayment will be issued within five working days from August 16," a customer service employee from Laocaibao told the Global Times on Tuesday. "Lenders should check lending vouchers in the column 'account analysis' on our app and a link will be sent to the registered mailbox to get a lending certificate."
Laocaibao investors are not optimistic about the plan, as several investors told the Global Times on Tuesday.
The online lending platform said on its website on Monday that the suspension of its P2P business was due to the business adjustment of its partner Shanghai Huarui Bank (SHRB), which unilaterally decided to terminate depository management cooperation from August 13, 2019.
The customer service employee confirmed the news, saying that the company plans a benign exit. "At present, our company is actively communicating with the financial office about the payment plan, which will be announced immediately after the final plan is determined. Please pay attention to the official announcement."
Laocaibao said that it takes time to carry out new depository management cooperation, without which the platform should stop new business based on compliance requirements.
However, SHRB gave an opposing explanation.
"At present, the depository business between our bank (SHRB) and Laocaibao remains normal, and the cooperation has not been terminated by the regulatory departments," a customer service employee told the Global Times on Tuesday. "We are not informed about the suspension of business of Laocaibao."
There were four online loan platforms working with SHRB, including Laocaibao as of August 12, according to data from the National Internet Finance Association of China (NIFA) updated on July 30, 2019.
A couple from Hongqiao in Shanghai said that they had invested more than 3 million yuan in the financial products of Zendai Wealth Management, all of which came from bank loans. Once the products are overdue, they will not be able to pay the bank. Another customer lent out 25.5 million yuan at the end of July, for a period of three years, on the Laocaibao platform.
