Wang Jun, lead financial sector specialist at the World Bank, speaks at the 6th China Financial Experts Annual Forum on April 25. [Agencies]
More than 1,000 small banks in China's townships offer microloans to small enterprises that used to be funded by pawn shops.Microloans amount to several thousand yuan, and they can be repaid in installments.
"For the many micro and small businesses, convenient, speedy and reliable access to loans is more important than the level of lending interest rates....", said Wang Jun, lead financial sector specialist at the World Bank, at the 6th China Financial Experts Annual Forum on April 25.
"Small businesses welcome swift and convenient microloans. Even charged 30 percent annual interest, they are still happy," Wang Jun, World Bank's chief economist, told chinadaily.com.cn April 25.
"Capital on the market is more than sufficient, and needed by small companies, but the lending channels are not efficient," said Liu Kegu, advisor at China Development Bank, at the forum.
By lending to big companies, banks may earn a huge interest income in one single deal thanks to an interest rate margin of around 10 percent. But only large banks with strong connections to large companies get big deals."Small companies should be the target of small banking institutions," Liu Kegu said. "Small banks better not think about big scale."
But President of Ganzhou Bank Xiao Minghua disagreed: "A large scale is necessary to maintain the market position."
A bank's market position is sometimes linked to the top executive's position as they are appointed by the local government's top officers. A top executive has to follow local government's instructions, which favor large companies as they contributed a lot in taxes and employment.
