Amend law to back small credit firms
By Lilith Hu |
July 2, 2012, Monday
|
Print Edition
Print Edition
Tan Weixian
Deputy director at the China Banking Regulatory Commission Shanghai Office
I AM going to make an official statement to call for necessary law amendment to strike loan sharks and to support credit for small and medium-sized enterprises.
It's necessary to establish and improve relevant laws and regulations to support small credit. First of all we need to protect private lending by combating loan sharks. Private lending at a rate that is three times more than the benchmark rate of the same period is defined as usury by the high court.
But the penalties for the loan sharks are absent. I have a proposal for the National People's Congress to modify the criminal code to include criminal penalties for crime of usury.
Besides, there is no law to support small business loans although the commercial banks are regulated to provide credit to the small companies. The lending to small business by the commercial banks each year must not be lower than the amount in the previous year. However if they fall off the target, there are no sanctions against them.
So I suggested that the NPC add a clause to the Law on Commercial Banks, which stipulates a certain percentage of loans must go to the small businesses. If the lenders do not meet the figure, they have violated the law.
Secondly, we need to set up a dedicated organization for small business finance. It's a common practice in countries and regions like the US, the European Union and Japan.
Currently we don't have an independent administrative department for SMEs or a policy bank to service them. We have a number of city commercial banks that provide small credit.
But it's not sufficient. We can speed up approval process if you (small credit firms) are committed to providing financing for small businesses.
Deputy director at the China Banking Regulatory Commission Shanghai Office
I AM going to make an official statement to call for necessary law amendment to strike loan sharks and to support credit for small and medium-sized enterprises.
It's necessary to establish and improve relevant laws and regulations to support small credit. First of all we need to protect private lending by combating loan sharks. Private lending at a rate that is three times more than the benchmark rate of the same period is defined as usury by the high court.
But the penalties for the loan sharks are absent. I have a proposal for the National People's Congress to modify the criminal code to include criminal penalties for crime of usury.
Besides, there is no law to support small business loans although the commercial banks are regulated to provide credit to the small companies. The lending to small business by the commercial banks each year must not be lower than the amount in the previous year. However if they fall off the target, there are no sanctions against them.
So I suggested that the NPC add a clause to the Law on Commercial Banks, which stipulates a certain percentage of loans must go to the small businesses. If the lenders do not meet the figure, they have violated the law.
Secondly, we need to set up a dedicated organization for small business finance. It's a common practice in countries and regions like the US, the European Union and Japan.
Currently we don't have an independent administrative department for SMEs or a policy bank to service them. We have a number of city commercial banks that provide small credit.
But it's not sufficient. We can speed up approval process if you (small credit firms) are committed to providing financing for small businesses.
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