What Is a Lending Institution?

This kind of appellation of loan company is limited to China, and it is different from domestic commercial banks, finance companies, auto finance companies, and trust companies that can handle loan business in terms of definition and scope of business. On August 11, 2009, the CBRC issued the Notice on the Regulations on the Management of Loan Companies (CBRC 2009 (76)), which regulated the behavior of China's loan companies.

loan company

The title of a loan company is limited to China, and it is related to domestic commercial banks, finance companies,

Loan companies are

(1) there are articles of association in compliance with the regulations;

(2) The registered capital shall not be less than RMB 500,000, which is paid-in monetary capital and shall be paid in full by the investor;

(3) Senior management personnel with professional knowledge and professional work experience;

(4) staff with corresponding professional knowledge and professional experience;

(5) having the necessary organizational structure and management system;

(6) Having a business place, safety precautions and other facilities related to the business that meet the requirements;

(7) Other conditions stipulated by the China Banking Regulatory Commission.

(1) Loans issued by loan companies should adhere to the principle of small amounts and diversification, improve loan coverage, and prevent excessive concentration of loans. The loan balance of a loan company to the same borrower shall not exceed 10% of the net capital; the credit balance of a single group corporate customer shall not exceed 15% of the net capital. ?

(2) The loan company shall establish a prudent and standardized asset classification system and capital supplement and restraint mechanism in accordance with relevant national regulations, accurately classify asset quality, fully accrue bad debt provisions, truly reflect operating results, and ensure that the capital adequacy ratio is at any point in time. Not less than 8%, and the adequacy ratio of asset loss reserves is not less than 100%.

(3) NPL ratio is below 5%

What is a loan trust

Loan trusts use trust funds in the form of loans, which is the main form of use of fund trusts. The loan trust is based on the principle of actual profit and dividends. The trustee is not allowed to promise to guarantee the principal and minimum return of the trust funds. It is a financial product with variable interest. The level of interest on loan trusts fluctuates, and is generally affected by the funding requirements of investment projects. When the capital requirements of infrastructure projects or other enterprises suitable for trust schemes increase substantially, the amount of trust funds loaned will be high.

The contractual term of a loan trust is generally more than 3 years, which is relatively illiquid. Most of the trust funds are lent to infrastructure users and have a long term. Once the trustee has reached a trust contract with the trustee, it cannot be terminated within its time limit. However, during the contract period, the client is in urgent need of money, and can also take the form of transfer.

Loan trust business

The loan trust business includes a working capital loan trust whose use is determined by the client and a loan trust whose management method is determined by the trustee.

(1) Working capital loan trust for which the client determines the purpose: Xia Guoxin gathers the trust funds of multiple clients to form a certain size and strength of fund portfolio, and provides funds to the intended users of the funds in the form of working capital loans. For production and business activities to obtain trust income.

(2) Loan trust whose management method is determined by the trustee: the client entrusts a certain amount of funds legally owned to Xia Guoxin (the trustee), and the trustee determines the management method and provides the loan to the borrower on its own behalf It is agreed to recover the principal and interest within a certain period and deliver it to the beneficiary's fund trust business.

The trust funds are mainly used for: well-known enterprises with strong economic strength, high credit rating, good reputation or assets with high liquidation ability (pledged), and low-risk liquidity loans with government financial budget arrangements to repay . Xia Guoxin specifically selects the users of the trust funds according to the actual situation. During the idle period of funds, it can be used for financial instruments with lower risks such as inter-bank lending and repurchase of government bonds.

Features of a loan trust

The characteristics of a loan trust are: After the client delivers the funds to the trust, the trust company uses the trust funds for a certain period of loan application.

Loan Trust Market Outlook in China

Loan trusts will have good market prospects in China because:

(1) The loan trust adopts a loan method in the form of capital use. As long as the mortgage or pledge and guarantee procedures are implemented, the risk is generally controllable. In terms of income, the use of funds by the loan trust is mostly medium and long-term, and its loan interest rate is much higher than the regular savings rate of commercial banks. Therefore, the loan trust yield has certain attractiveness to investors (clients).

(2) When a trust company is in an active position to create a trust, as long as its security and profitability are sufficiently attractive to investors, it will usually be recognized by investors.

(3) China, like Japan at the time of the creation of the loan trust, is a rising developing country. The collection of medium- and long-term construction and development funds is extremely important for promoting the development of the country's economy. The construction of trust products with huge amounts of funds will inevitably have broad market prospects.

1. Risks from role positioning. Loan companies are non-financial institutions, "doing financial affairs and not enjoying financial rights". The core of microfinance is microfinance. In fact, it is not just microfinance. It includes not only credit but also savings, membership fees, insurance, All these other services can be called microfinance.

2. Micro-loan companies can only carry out loan business and cannot absorb reserves. To solve financing bottlenecks, they must also prevent the risk of illegal financing.

The main sources of funding for microfinance companies are capital paid by shareholders, donated funds, and integration funds from no more than two banking financial institutions. Within the limits prescribed by laws and regulations, the balance of the microfinance company's funds received from banking financial institutions shall not exceed 50% of the net capital. The fundamental reason for the shortage of funds of microfinance companies is that they have not really entered the financial market and are not qualified to enter the lending market and bill market.

3. The most important operating market risk for microfinance companies.

SMEs face difficulties in starting businesses, financing, and development. Banks now attach great importance to SME loans. If the bank really does this business, then high-quality SME customers will be concentrated in the bank, and small loan companies can only face low-quality SMEs. The service target of microfinance belongs to the lowest-end customer group in the financial market. The traditional banking industry uses mortgage guarantee as the basic means to prevent and control risks, which is a difficult condition for low-end customers to meet.