DOMESTIC consumer lending firm Lexinfintech will delay the pricing of its planned NASDAQ initial public offering (IPO) to conduct more due diligence, a source with direct knowledge of the situation said.

The move comes after the government issued new rules to tighten control of the micro-loan sector.

China’s financial regulators Friday circulated new regulations to local governments targeting fast-growing online micro-lenders, which include a ban on loans to borrowers who have no source of income.

The crackdown comes amid criticism that users of small, unsecured “cash loans,” which can be issued by mobile phone apps, are vulnerable to exaggerated advertising and aggressive debt collection.

Lexinfintech, which focuses on loans to educated young adults between 18 and 36 including loans for e-commerce purchases, had been planning to raise some US$500 million in its IPO. It filed its prospectus last month and had been planning to make its market debut Dec. 12, the source said.

The source did not say how long the IPO may be delayed.

A representative for Lexinfintech said the company “continues to work toward those objectives as described” in its filing.

The prospect of a crackdown has weighed on shares of U.S.-listed Chinese micro-lenders.

On Friday, shares of China Rapid Finance Ltd. plunged 18.9 percent while PPDai Group Inc. shares dropped 8.3 percent. Shares in Qudian Inc., which is 11 percent owned by Alibaba Group affiliate Ant Financial, rose 1.3 percent after it said it endorsed the new rules and announced a US$300 million share buyback.

Online consumer lending in China, of which cash loans are a significant portion, dwarfs similar activity in the rest of the world combined, accounting for 85 percent of all such activity globally last year. (SD-Agencies)