YIDAI, an online peer-to-peer (P2P) lending intermediary, is the latest to exit the business as China reins in its US$176 billion experiment with this riskier form of financing.

The company set up a committee to start refunding its lenders after “months” of losses, Yidai said in statements during the New Year holiday. It has about 32,000 lenders with an outstanding principal balance of 4 billion yuan (US$581 million), and expects to repay them in three-to-five years.

Yidai, which received investment from SoftBank China Venture Capital in 2014, also said shareholders and executives aren’t allowed to leave the country.

Authorities are planning to wind down small and medium-sized P2P lending platforms nationwide, sources with knowledge of the matter had said earlier.

Tougher regulations and rising bankruptcies have spooked investors, and lending on those online platforms has plummeted, according to data from Rong360.com, a provider of information about financing and loan products.

Analysts from China International Capital Corp. said they expect the number of P2P lenders to contract to fewer than 200 in three years’ time. Yingcan Group, a research firm that tracks the industry, expects the number of Chinese P2P lenders may drop by 70 percent this year.

As few as 300 companies will remain by the end of the year, according to the estimate from Shanghai-based Yingcan Group. The number of operators dropped by more than 50 percent to 1,021 during 2018, it said, adding that there’s been no new entrants into the market since August.

The lack of oversight allowed for world-beating growth, with outstanding P2P loans ballooning from almost nothing in 2012 to 1.22 trillion yuan in December 2017.(SD-Agencies)