CHINA’S more than 2,000 online lenders face sweeping changes in their businesses after the country’s financial regulators imposed strict new rules on the booming Internet finance industry.

    Some online platforms will need to stop their recent practice of extending loans and act only as intermediaries between lenders and borrowers, said Xu Hongwei, the chief executive officer of Yingcan Group, which tracks China’s peer-to-peer lenders.

    About 90 percent of the websites will need to introduce changes of some kind, such as improving disclosure and appointing banks as custodians for their clients’ assets, he added.

    China’s online lenders helped fuel an equity roller-coaster that saw the benchmark index rallying more than 150 percent in the 12 months through June 12 before abruptly crashing.

    A few platforms will go out of business because they have effectively been behaving like Ponzi schemes, by raising money from new investors to pay off wealth management products they had sold to previous investors, Xu said.

    “We will embrace the biggest reshuffle of the online lending industry. It’s going to be long and painful,” said Xu.

    The People’s Bank of China announced new rules Saturday that require the online sites to serve only as intermediaries between lenders and borrowers and banned them from “enhancing borrower creditworthiness” by raising funds of their own to lend out. (SD-Agencies)