What is a Soft Loan?

Soft loans are loans with favorable conditions or foreign currency loans repayable in the domestic currency. The long-term interest-free preferential loans provided by the World Bank have a loan term of up to 50 years and generally only charge a handling fee of 0.75% per year. The loans are mainly to developing countries with a per capita gross domestic product of less than US $ 680, especially low-income countries. Loans are often linked to specific projects and are often mixed and matched with World Bank hard loans. ^[1]

Soft loan

Right!

Soft loans are loans with favorable conditions or foreign currency loans repayable in the domestic currency. The long-term interest-free preferential loans provided by the World Bank have a loan term of up to 50 years and generally only charge a handling fee of 0.75% per year. The loans are mainly to developing countries with a per capita gross domestic product of less than US $ 680, especially low-income countries. Loans are often linked to specific projects and are often mixed and matched with World Bank hard loans. ^[1]

1.Loans with interest rates below market levels

2. Loans provided by multinational development banks and the World Bank to developing countries. In addition to longer repayment schedules and lower interest rates than ordinary bank loans, soft loans also have

Generally no more than

The operating mode of soft loans is that the China Development Bank first lends to

Soft loans in English are: soft loan; soft financing. Loans with interest rates lower than the overall market level. Loans provided by multinational development banks and the World Bank. These loans have rollover characteristics. Borrowers pay only interest and service charges when due. The loan is more than regular business

Development Bank

Soft loans were launched with the establishment of the China Development Bank. It is a special loan business approved by the China Development Bank as a policy bank. When the China Development Bank was established, the State Council carried out the nature, functions and tasks of this business. Clear regulations.

Issue No. 22

In 1994, the State Council issued the "Notice on Forming a National Development Bank" [No. (1994) No. 22], which stipulates in the annex "Development and Operation Plan of the National Development Bank" that the use of the funds of the National Development Bank shall refer to the World Bank The operating mechanism is carried out. Loans are mainly divided into two parts:

1. Use of the registered capital of China Development Bank

One is the soft loan, which is the

"Soft loans have three significant characteristics, one is long maturity, the other is low interest rates, and the third is to be used as project capital." A relevant person in the regulatory department told reporters that CDB soft loans have a long maturity, typically 20-25 years. And also has

Related data display

Because of the above advantages of soft loans, China Development Bank's soft loans have developed rapidly, especially in recent years.

"Soft loans are in the context of financial system reform and

Sources of funds

According to the regulations of the State Council, the source of funding for soft loans for development banks should be

From the report, CDB's various indicators are the best among large banks, and can even be counted as first-class banks worldwide. By the end of 2007, the total assets of China Development Bank were 2,874.7 billion yuan, and net profit for the year was 29.6 billion yuan.

CDB was established in 1994. For 14 years, the basis for CDB's business development is State Council Document (1994) No. 22, which is the "Notice of the State Council on Establishing a National Development Bank." The "Operating Plan" and the "Charter of the China Development Bank", the nature, functions and tasks of the CDB soft loan are stipulated in this document.

Since there are no other laws with higher legal effectiveness to refer to, CDB's business is often troubled. "The content of the State Council (1994) No. 22 document has been inadequately adapted to the development status of development banks and the requirements for deepening financial reforms." Supervisors said that the 14 years since the establishment of development banks were also an important period for China's transition to a market economy. Under the conditions, the development of the development bank also encountered many new situations and problems, and the regulations may not fully adapt to the new situation.

Whether the United States, Canada, and Germany, which established policy banks earlier, or Japan, South Korea, which established later, have policy banking laws. There is no special policy banking law in China so far. Although the central bank is leading the formulation of policy banking regulations, this regulation has not surfaced for various reasons.

And industry experts have been calling for the development of policy banking regulations that are in line with China s national conditions on the basis of reference and reference to mature foreign experience. Through legislation, policy banks are distinguished from commercial banks to further clarify the nature and nature of policy banks. Status, to solve problems such as its development direction, operating system, operating mechanism, business function and role.

With the rapid development of the economy, the market environment, tasks and operating conditions facing policy banks have undergone tremendous changes. Many of the original policy businesses have gradually become commercial businesses. In the 14 years since the founding of the China Development Bank, its mission as a fiscal extension function has basically ended. Therefore, China Development Bank must be market-oriented, follow market rules, expand its business in the direction of market demand, and reform its operations.

Zhao Peng, representative of the National People's Congress and president of the Industrial and Commercial Bank of Anhui Branch, has been calling for the formulation of the "Regulations for the Management of Policy Banks" as soon as possible. According to Zhao Peng, through the regulation of the laws and regulations of policy banks, policy banks, including China Development Bank, must be reformed to have a sound institutional system, clear business objectives, scientific governance structure, good asset conditions, business management standards, sound internal control mechanisms, Financial institutions with advanced management methods and strong policy implementation capabilities. At the same time, the state should rationalize the relationship between commercial finance, cooperative finance, and policy finance as soon as possible. The CDB's policy business must be matched with the reform of the financial system, strictly define the scope of business, and achieve social and profitability.

The Third National Financial Work Conference held by the central government clearly stated that among policy banks, the development of the National Development Bank should be promoted first, and the development banks should be fully commercialized in accordance with the requirements for the establishment of a modern financial enterprise system, operating independently, at their own risk and at their own risk. Profit and loss, mainly engaged in medium and long-term business.

After the goal of commercial transformation was determined, the reform of the China Development Bank quickly advanced. On December 31, 2007, the China Development Bank received a capital injection of USD 20 billion from the Central Huijin Company. The industry expects that with the gradual clearing of the leadership positions of CDB, the listing of the company will also come naturally.

CDB reform is a transformation from a policy bank to a commercial bank. It requires both a system transformation and a transformation. The reform spans a lot, which is different from the reform of state-owned commercial banks under the existing commercial bank business direction, framework and model.

After CDB's commercial transformation, although it will no longer issue new soft loans, it will still manage more than 300 billion yuan of soft loans issued in the past. China Development Bank has paid enough attention to the management and potential risks of soft loans, will manage the entire process of soft loans, reorganize and improve the existing soft loan management regulations and operating procedures, and focus on monitoring the soft loan funds flow to prevent Misappropriation. CDB will also comply with the requirements of the regulatory authorities. Once the borrower misappropriates the soft loan, it will promptly recover the loan or change the loan contract. CDB pledges to maintain regular communication with the regulatory authorities to ensure that within the scope of its mandate, soft loans can play a role in supporting socio-economic development, and control risks reasonably to ensure the safety of financial assets.

The CDB's series of reforms, including soft loans, are closely linked to its commercial transformation. In accordance with the overall goals of CDB's commercial transformation approved by the State Council, CDB will fully implement commercial operations in accordance with the requirements for the establishment of a modern financial enterprise system, and implement independent operations, bear its own risks, and bear its own profits and losses. Through financial reorganization and internal reforms, market-oriented, establish sustainable operating mechanisms and incentive and restraint mechanisms, comprehensively improve risk prevention capabilities, and transform development banks from policy-based financial institutions to adequate capital, strict internal control, operational security, and services Commercial banks of high quality, good efficiency, innovative ability and competitiveness. ^[2]