BEIJING - Chinese experts have called for better supervision of the booming online financing industry as bankrupt peer-to-peer (P2P) lending firms have put investors' money at risk.

According to "Wangdaizhijia" (home of online lending), a Chinese P2P lending portal, some 49 P2P lending companies have gone bankrupt or encountered capital chain problems this year.

P2P lending is the practice of lending money to unrelated individuals without going through a bank. This lending takes place online on P2P ?websites with an average interest rate of 15 to 20 percent, more than twice China's official benchmark.

As individuals and small companies in China have difficulty getting credit from banks, P2P lending with its simplified credit checks is the best way for them to get funding. It also offers a good chance for the middle classes to invest as they can normally get three or four times the return on bank deposits.

There were about 400 P2P lending companies in China at the end of 2012 with a yearly turnover of more than 20 billion yuan (3.26 billion U.S. dollars). The number of those companies is expected to exceed 800 with a yearly turnover of 100 billion yuan by the end of 2013, said Xu Hongwei, a senior executive of the Wangdaizhijia.

Competition among P2P lending firms pushed the interest rate up to 20 percent. Some firms even offer a 48 percent annual return to woo investors which increased the default risks for borrowers, said Xu.

Lack of government supervision allowed wild development of online finance. Not the central bank, nor bank regulators, nor industry and commerce authorities, have listed the online financing on their areas of supervision, said Huang Zhen, a professor of law with the Central University of Finance and Economics.

"With only tens of thousands of yuan (thousands of dollars), you can register a company as a 'consultancy' or 'e-commerce'," said Huang, "then you can establish a website doing online financing. The threshold is too low and sooner or later somebody will take the money and run."

Allwinsz, a P2P lending firm based in the southern city of Shenzhen, suspended operations only four months after its launch.

An investor surnamed Lu from the eastern province of Jiangsu invested 80,000 yuan in July on a 20-day program with an annual return of 48 percent. But so far he has received only 8,000 yuan. He opened negotiations with the company in October but failed to get his money back. "I have no hope now. Just take it as a nonperforming asset," said Lu, who has reported the case to the police.

Although most of the P2P lenders guarantee investors' loot in case of ?default, a small percentage of bad debt can easily swallow their registered capital completely.

Zhao Xijun, professor of finance at Renmin University of China, suggested the government set a threshold for P2P lenders as with micro-loan companies and pawnshops. The government can put restrictions on registered capital, personnel qualifications and credit records, said Zhao.

It can also ask all the P2P lending firms to register and report their data regularly. Licensing P2P firms is also an option, he said.