Pilot Guidance on Small Loan Company jointly issued in May by China Banking Regulatory Commission (CBRC) and People's Bank of China (PBC) provides a policy basis for the legalization of private capital. Later, on July 13, Zhejiang provincial government officially launched the pilot program of small-sum loan companies.
In Zhejiang, there are 111 enterprises in the shortlist to be approved, and the loan service can be started around October 2008.
According to the introduction, the small loan companies are neither banks nor financial institutions, and the main source of funding must be owned capital, which can only be lent but can not be deposited. The loan is not permitted to provide to the shareholders.
Thereinto, there are strict requirements on the main management qualification of small loan companies. What's more important is that the PBC emphasized an open upper limit on lending rate, which can't exceed the upper limit set by the judicial branch, i.e. four times of the bank's lending rate in the same period; the floor level of the lending rate is 0.9 of benchmark interest rate of loans issued by the PBC, and the extent of the fluctuation will be fixed according to the market principle.
In Wenzhou, "Ten more companies come for consultation everyday," said Zhou Dewen, president of Wenzhou Association for the Development Promotion of Small and Medium Enterprises, "the applicants are no less than 1000 enterprises." Actually, not only the small companies but also the big enterprises are acting positively. The people in charge from Wenzhou Jiaxin Investment & Guaranty Co., Ltd. and Wenzhou Wanshida Credit Guarantee Co., Ltd. revealed they are aggressively applying for small loan companies, and the concrete way is that the association shall work as a coordinator and the enterprises shall participate as a group.
In Zhejiang, there are 111 enterprises in the shortlist to be approved, and the loan service can be started around October 2008.
According to the introduction, the small loan companies are neither banks nor financial institutions, and the main source of funding must be owned capital, which can only be lent but can not be deposited. The loan is not permitted to provide to the shareholders.
Thereinto, there are strict requirements on the main management qualification of small loan companies. What's more important is that the PBC emphasized an open upper limit on lending rate, which can't exceed the upper limit set by the judicial branch, i.e. four times of the bank's lending rate in the same period; the floor level of the lending rate is 0.9 of benchmark interest rate of loans issued by the PBC, and the extent of the fluctuation will be fixed according to the market principle.
In Wenzhou, "Ten more companies come for consultation everyday," said Zhou Dewen, president of Wenzhou Association for the Development Promotion of Small and Medium Enterprises, "the applicants are no less than 1000 enterprises." Actually, not only the small companies but also the big enterprises are acting positively. The people in charge from Wenzhou Jiaxin Investment & Guaranty Co., Ltd. and Wenzhou Wanshida Credit Guarantee Co., Ltd. revealed they are aggressively applying for small loan companies, and the concrete way is that the association shall work as a coordinator and the enterprises shall participate as a group.
