BEIJING (REUTERS) - Alibaba's Ant Group said on Friday (Dec 18) it had stopped allowing individuals to deposit funds with banks via its online platform Alipay, as regulatory demands to fend off financial risks mount.
Ant has "voluntarily removed" the online deposit products from Alipay "in accordance with the recent regulatory requirements for online deposits services," according to a company statement.
The removal will not impact existing individuals who have already deposited money with banks via Alipay, it added.
The financial arms of big tech companies including JD Digits, Didi Chuxing and Baidu's Du Xiaoman Financial have been offering high-yield deposits at local banks on its apps.
China's regulators have warned the country's big tech giants that they face closer scrutiny. A planned US$37 billion (S$49 billion) stock listing of Ant Group was suspended in November after the regulatory warning.
Regulators have recently said local lenders attracting deposits nationwide with the help of internet platforms are violating regulatory rules that limit smaller city banks to drawing business from their home market.
The products may also encourage high interest rates on deposits, thus lifting costs for banks and intensifying the liquidity crunch of smaller lenders, Sun Tianqi, head of the financial stability bureau at the People's Bank of China (PBOC), said at a forum this week, according to local newspaper the 21st Business Herald.
"The proxy sales of bank deposit products on third-party internet financial platforms are illegal financial activities, and are like 'driving without a license'," Mr Sun said, adding that such business should be included in the PBOC's financial supervision framework.
Benchmark six-month term deposit rates stand at 1.3 per cent, but rates on popular six-month deposit products offered by online platforms can be more than three times higher.