To better regulate the country's fast-growing online financial industry, the Chinese government has approved the creation of an Internet finance committee that will promote self-regulation among its members.

The special committee has chosen Ping An Insurance Chairman and CEO Ma Mingzhe to head the association, which will operate under the direct supervision of the China's central bank, the People's Bank of China.

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The official China Daily reported that the committee has already received the approval of the country's cabinet, the State Council, to be the official association for the growing online financial industry.

Self-Regulation

According to the statement released by the committee, the association will promote self-regulation and cooperate among all circles of the industry to ensure that the fast-growing Internet finance industry will operate according to government rules and standards.

The creation of the special committee came after reports that the country's online finance industry is getting more popular than the traditional financial sector that includes banks. Even as the committee was not formed yet, the central bank has already issued orders to restrict the operations of Internet financing.

Recently, the Commercial and Industrial Bank of China (ICBC), the largest bank in the country, said it will restrict transactions with Yu'ebao, the online financial product of Alipay. Alipay is the online payment arm of e-commerce giant Alibaba.

Building Relationships

From five interfaces, ICBC has trimmed into one the interfaces that permit bankcard holders in making online payments through Alipay. ICBC said it only acted on the orders of the central bank.

Even with the restriction, Alibaba said it hopes to continue building relationships with commercial bank and does not aim to overturn the traditional banking industry.