监管机构监督互联网金融产品收益率

With high annualized yields, Internet finance firms are gaining grounds on banks. But the companies may face new challenges, as regulators consider new rules to cap the yields on online funds.

Interest rates on Chinese bank deposits are subject to a cap of 10 percent above the benchmark set by the central bank. Online funds like Yu'e Bao currently invest most of their funds in interbank deposits that aren't subject to the cap. That allows the internet funds to pass higher interbank yields on to customers.

But it also hurts bank profits by reducing the banks' supply of low-cost deposits while increasing the need for relatively expensive funding from the interbank market.

The China Banking Association suggests that the deposits of the online funds be included as general deposits and pay reserves as financial institutions do.

"If the funds are defined as general deposits, they should hold 20 percent of their deposits in reserves. The interest rate of the reserves given by the central bank is only around one percent. With 20 percent of the money given to the banks, the yields will definitely decrease. I estimate the yields will drop from the current 6 percent to about 2 percent," said Guo Tianyong at the Central University of Finance and Economics.

China's current benchmark is 3 percent for one-year deposits. The annualized yields on internet funds like Yu'e Bao are above 6 percent.

Since launching last June, Alibaba's Yu'e Bao has attracted 400 billion yuan in assets under management. Similar online products from Baidu and Tencent also contributed to a decline of one trillion yuan in traditional bank deposits in January.