China is cracking down on online moneylenders who target university students, following concerns about the largely unregulated industry.
A recent government directive has ordered such lenders to suspend all activities wooing student borrowers.
The move follows reports of exorbitant interest rates and unsavoury practices in the industry, including demanding “nude selfies” as collateral.
Online peer-to-peer moneylending has grown popular in China in recent years.
Known as “wang dai” in Chinese, it sees strangers providing small loans to others via websites and phone apps.
‘Severely harmed their safety’
The directive (in Chinese) was made by China’s banking, education and social security authorities, according to a copy released by the Jiangxi provincial government on its website on Friday.
It said the measures were needed to address moneylenders “making extortionate loans” and other behaviour that has “severely harmed the safety of university students”.
The exact number of online moneylenders in China is not known, but one microfinancing portal called Wangdaizhijia lists at least 500 such platforms.
In recent years some moneylenders and loan sharks have begun targeting university students in need of quick and easy credit, according to Chinese reports.
Some students have since fallen prey to spiralling debt as a result of high interest rates.
In some cases, borrowers were instructed to send naked pictures of themselves, with their identification cards, to the lender as collateral. They would threaten to release the pictures if the student defaulted on their debts.
In December the naked pictures and contact details of more than 100 young female borrowers were leaked online, causing an outcry and shining a spotlight on the underground business.