外资银行试水农村金融 网点少是软肋
Foreign Banks Explore the Rural Finance in China; Less Service Point Is Achilles' heel
By Liu Hongpeng, Xiong Congru
Source: Economic Information Daily
It has been 2 years since Standard Chartered Bank cooperated with Rural Credit Cooperative to do the micro-credit at the test sites. During the program, praises and criticizes are in great number but the villagers have few knowledge about that.
In the beginning of this year, Mr. Amat who is 57 years old and he filled in one survey form and then he gained a loan of 15,000 RMB from Rural Credit Cooperative who is on behalf of the Standard Chartered Bank. Besides subsidize the cost of cotton seeding, he bought a calf. That calf costs his 3,500 RMB in January; it grows up in May he doesn’t sell it when someone bid for 7000 RMB. Mr.Amat says whoever grants the loans ,as long as I can gain the money that can “born” money.
Whose Test Sites?
On December 21st, 2007, Esquel Group and Standard Chartered Bank China signed a memorandum of cooperation at Urumchi that bring the micro credit test site towards local farmers out. It becomes the first program that the foreign capital bank directly invested in China with credit to local farmers.
However, the test sites can achieve the smooth development not only depends on this. Standard Chartered Bank, Esquel Group and the local government have their own plans.
Katherine Zeng, CEO of Standard Chartered Bank China, says that we bring the experience that we gain from all around the world to China to improve Chinese rural financial service level.
But the experts from the industry source suppose that foreign capital bank competes with domestic band; less service point is the Achilles’ heel. Therefore, make a full assessment of a situation is very important stage of their expansion. If it succeeded, due to their abundant capital and management level, gain more service points in large-scale can without effort.
Esquel Group in Aqsu area is the important partner of this test site of Standard Chartered Bank. The leading cadre, Mr.Xu Yanning, tells the whole story of this program. Xu came from Awat county and he deeply understand the difficulty of credit of the local cotton growers, he hopes he can offer some assistance with it. Meanwhile, Esquel Group, as an enterprise, has the bottleneck that it cannot beyond when it wants to offer some financial service to farmers. Fortunately, this idea received the strongly respond from its strategic partner, Standard Chartered Bank.
Anyway, President of Esquel Group Mr.Yang Minde might hit the heart of the local government “this credit program can solve the problem of lack of capital during the agricultural production then it can promote the development of agriculture and help the farmers to improve their living standard.
The officials of Xinjiang Uygur Autonomous Region autonomous region in high level have proved this program. Soon later, rural credit union of autonomous region appointed Rural Credit Cooperative of Awat County to be the cooperation side of Standard Chartered Bank’s test site to grant loan under the interest of Rural Credit Cooperative on behalf of the bank.
Unexpected Surprise
In the beginning of this year, Mr. Amat of Bshairk village surprisingly discovered that getting 15,000 RMB credit is quite easy and you don’t need to seek or rely on a relationship nor mortgage and guarantee. Comparing with the past years, it is a custom to treat the credit clerk meals if you want to gain loan. Moreover, to the clerks, the credit environment is completely different from the past and the fellow villagers gain the loan in spring and pay them back in autumn. This is becoming a convention.
To the Rural Credit Cooperative of Awat County, “they don’t take any responsibility with call in arrears nor the failure of the loan return. Under this situation, the test sites program of Standard Chartered Bank gains the principal and interest back from 110 families nearly 600 people of Bshairk.
When we mention the benign interaction of the two sides of farmer’s micro credit, we cannot deny the great contribution of the autonomous region to “Credit Project”. In fact, from the end of 2007, multi-cooperation started to rebuild the rural credit system in autonomous region leading by the Rural Credit Cooperatives in every level. It breaks the difficult situation and opens the financial predicament of credit.
Introduced by the rural credit union of autonomous region, in the towns of basic level, it normally elects the people from the government, Rural Credit Cooperatives and the prestige of villages to form the merit rating team. They generally evaluate the level of credit of villagers and issue the certificate of unsecured loan to farmers and herds according to their credit record, production operation, abide by laws and observe discipline.
Around the service point in every Rural Credit Cooperative of the counties, farmers can apply for loan with proof of identity. Subject to different level of unsecured credit, farmers can gain micro credit loan up to 30,000 RMB in maximum efficiently without guarantee in one single day.
As for promotion of the credit project, Deputy Secretary of the Party committee and Chairman of Xinjiang Uygur Autonomous Region Mr. Nur Bekri says that civil servants of the Party and government organizations should set up the model by themselves; if there have Non-performing loan in financial organs in arrears due to the reason of the people mentioned above, local organizational units and the committee for discipline investigation will adopt necessary behaviors to closing the revenue in limit time.
Mr. Nur Bekri also emphasizes that every region should learn from the lesson of dismiss of Khamil Rural Credit Cooperatives in the early 2008. Relative departments should take resolute action to prevent those involvements that escape and steal the credit loan in rural financial organs with malice evade capture. Never let the loan cheater get by under false pretences and “make strong security of credit of financial organ resolutely”.
According to the introduction of the administrative office of Aqsu area, since 2002, they have cleaned the arrears totally 32,000,000 RMB of Rural Credit Cooperative made by the Party and government unit and the cadres of them. Accumulating regain the Non-performing loan up to 455,000,000 RMB and the rate of Non-performing loan falls down from26.5% to1.12%.
Under the new system of rural credit, the credit quality gets an amazing level in some local Rural Credit Cooperatives of Xinjiang. At the neighbor county with Awat, Toqsu county, 23.7 thousands families take the micro credit from Rural Credit Cooperative annually and it covers 90% of the family number of that whole area; besides, the rate of repayment is close to 100%.
The director of where the Bshairk locates at, Mr. Mahmet says that presently the credit of financial organs just can satisfy the requirement of local cotton growers but they need more to construct the anti-seismic houses, develop the forest and fruit industry, native animal husbandry and do some small businesses. Therefore, the satisfaction of the request of farmers is just “a beginning”.
Around the whole Autonomous Region, earthquake-prone areas have been acting comprehensively construction of anti-seismic houses and the total accumulate number reaches 41.2 billion RMB within 5 years; 1895 thousand families live in the rebuilt and improved houses and there are 800 thousand to go within 3 years. At the mean time, the Party Committee and government of Xinjiang Uygur Autonomous Region said that take a further action to speed up the development of forest and fruit industry; in 2015, we would stabilize the area of high-quality forest and fruit up to 15 million mu and the per capita profit of forest and fruit industry would cover more than 30% of the net per capita profit.
The reliable credit environment ant the highly request of market are the reasons why many bankers are coveting to it.
Catfish Noisy in the Crowd
“ There are nearly 20 test sites of banks in Awat; that’s adequate. If there are more will come and no one will have good business at last.” the Board Director of Awat Rural Credit Cooperative, says when he talks about the test site of Standard Chartered Bank.
The awkward situation is his organization is appointed to be the partner of the test site program of Standard Chartered Bank by higher authority. And on behalf of the bank, Rural Credit Cooperative of Wuluq County grants the loans.
Mr. Memet mentions that Awat is an agricultural county where has few industry enterprises and all credits go to the fields. In the past years, the development of Rural Credit Cooperative fell far behind the local economy due to the operation concept. But now, this problem has been solved and the speed is increasing to do better service with the agriculture, countryside and farmers.
He also says it is not very easy to do finance business in rural areas. Let’s analysis the business of Rural Credit Cooperative: In February of each year, Cooperative will grants the loan for spring ploughing and the farmers will repay them from July to October. However, from November to next January, the capital of the Cooperative has no engagement. The flow stops and the cost go higher. “ With this kind of situation, other banks come still, we definitely will have pressure.” However, more pressure is coming still.
Mr.Huang Jingming, Deputy Director of Bureau of local subsidiary of Banking Regulatory Commission, says that Bank of Agriculture withdrew all service points in all towns of Awat concerning about the judgment of “high level cost and risk” with rural micro credit in 2004. Bank slants its core to the big cotton growers and comparative High-end customers. Meanwhile, in recent periods, there is a big change with its operation concept and they give more strength to basic level families. They added to 4 points in Awat.
Post-office Savings Bank (P.O.S.B.) use its advantage of service points to open 2 more service points in Awat in 2008 and grants loan in October of that same year. Till the end of March of this year, balance number is 1.2873 billion RMB and credit balance reaches 16 million RMB.
Xinjiang Branch of P.O.S.B. declares that in 2009, they will add 80 micro credit service points and the total number can reaches 150 that means every county will be connected together.
From the view of supervision and control, Huang Jingming believes that the joining of Standard Chartered Bank in rural financial area is a good case for the peasants. It offers one more channel for pooling of funds anyway. Furthermore, the advanced operation and management concept will stimulate the Chinese investment banks. We call it "catfish effect”.
In the early time, the high level of declared to media that it has 150 years history that Standard Chartered Bank runs its business in China. However, they have few knowledge about the rural areas thus, they need more time to enter into there step by step. They will enlarge the cooperation with the third part to do credit business.
People who consider the enter of foreign capital banks as the coming of wolves will talk about the first Standard Chartered Rural Bank in Linger of Inner Mongolia on February 4th, 2009. According to the declare of Standard Chartered Bank, they will set up more new rural service points in the near future.
Even though, some analysts suppose that in the next years, Rural Credit Cooperative, as the greatest credit side of rural micro credit in Xin Jiang, will not be vibrated with its special advance position in rural financial region by other banks including the foreign banks. This not only because the Cooperatives have already had 90% of the peasant household customers but also gain the most maximum support from the basic level government leading by the autonomous region government. During the progress of credit level evaluation and the grant and clean of the loan, Cooperatives save a huge amount of business cost.
