On Friday, China's financial regulators fined Ant Group, the fintech affiliate of Alibaba, a hefty 7.12 billion yuan ($986 million) for violating consumer protection laws, corporate governance regulations and engaging in business activities supposed to be carried out by banks and insurance institutions, among others.

Tenpay, the digital payments subsidiary of Tencent, was also fined 2.99 billion yuan ($414 million) for violating consumer protection laws and corporate governance regulations, the People's Bank of China (PBOC), said.

Additionally, some senior executives of Ant Group and Tenpay were fined, with amounts ranging from 50,000 to 1.475 million yuan.

The fines capped several years of extensive regulatory overhaul against the fintech industry.

Since late 2020, financial regulatory authorities have been strengthening supervision, urging large platform enterprises including Ant Group and Tencent to comprehensively rectify illegal and irregular activities in their financial operations.

Ant Group’s blockbuster $37 billion initial public offering was scrapped in late 2020 due to regulatory concerns. Since then, the fintech company, in which Alibaba holds approximately 33% stake, has started an overhaul and restructuring under the guidance of regulators.

Later, Tencent was also required by the regulatory authorities to strengthen financial operation compliance.

"Currently, most of the prominent issues have been rectified...Our focus has shifted from driving rectification of platform enterprises' financial operations to normalizing supervision," the central bank said in a statement on Friday.

Ant Group said in a statement that it will “comply with the terms of the penalty in all earnestness and sincerity and continue to further enhance our compliance governance.”

The penalty is expected to pave the way for Ant to obtain a financial holding company license and potentially reignite its long-awaited stock listing plans.

Hong Kong-listed shares of Alibaba Group rallied sharply in pre-market trading, rising 3.3 percent, after the People's Bank of China announced the news.