Small loan companies need capital

Watch Video

Play Video

Despite the emergence of these small loan firms, they are facing challenges. Due to the markets' huge financing demand, many of them are facing a capital shortage. Experts suggest some should qualify as commercial banks.

With credit lines tightening, small loan firms like this are a life-saver for small-and-medium sized enterprises.

The Sheng Rui De small loan company was established to help small high tech start-ups to run their business smoothly. But now, massive market demand has drained their capital pool dry.

Liu Weiguo, Initiator of Sheng Rui De Micro-credit Co., Shanghai said "We are willing to help small firms to do so, but due to capital shortages, we are unable to help them."

The Dong Hong Qiao small loan firm has the same problem. Business has stalled because all of its 500 million yuan capital has been loaned out.

Feng Wen, Deputy General Manager of Dong Hong Qiao Small Loan Co., Shanghai said "We are lending capital out as soon as its paid back. And even like this, we still do not have sufficient capital to run our business."

According to current regulations, small loan companies can only loan out their registered capital and funds from no more than two banks.

But in the competitive market, who will lend capital to its competitors.

Professor Guo Tianyong, Central University of Finance and Economics said "Some banks are also promoting their refinancing business for small-and-medium sized enterprise loans. So banks and small loan firms, they are in competitive relationship."

More than 3,000 small loan firms are facing the same situation now - they are allowed to iss! ue loans , but are not allowed to raise funds from the market.

China's banking industry regulator ruled in 2009 that small loan firms could qualify as rural banks. But that policy has one fatal prerequisite for small loan companies to hand over their power of management.

So experts say an adjustment to the current policy is necessary for small loan companies to survive.

Editor:Xiong Qu |Source: CNTV.CN


Comments

Post a Comment

Popular posts from this blog

Alibaba's Jack Ma expresses Yahoo interest

Image
Jack Ma, chairman and CEO of Alibaba Group, said he is very interested in buying all ofYahoo Inc. [File photo] Jack Ma, chairman and CEO of China's Alibaba Group, has said he is "very interested" in buying all of struggling Yahoo Inc. Alibaba spokesperson John Spelich confirmed that Ma made the remarks during his keynote speech at Stanford University in response to a question from a member of the audience. "Alibaba is very important to Yahoo, so is Yahoo to Alibaba," said Ma during a Q&A session. When he was asked which part of Yahoo he was interesting in, Ma responded, "the whole piece of Yahoo", Reuters reported. After Yahoo fired its CEO Carol Bartz, several U.S. media outlets singled out Ma as the outstanding candidate to succeed Bartz. Yahoo has reportedly also received inquiries from Microsoft, News Corporation and private equity firm Silver Lake Europe LLP. Alibaba faces a number of obstacles if it proceeds with its planned purchase of Yaho...
Keep reading

Shanghai port consolidates its position as world's busiest

Image
Shanghai, the world's busiest container port, will consolidate its title this year and leverage its record throughput to become a multi-faceted provider of port services. Containers lie at the Waigaoqiao port in Shanghai yesterday when the city witnessed 30 million TEUs cross its ports. [Shanghai Daily] The city, which overtook Singapore as the world's biggest container handler last year, saw its annual container traffic volume surpass 30 million 20-foot equivalent units (TEU) yesterday. The figure hits an unprecedented level in the world's port history and marks a new leg in Shanghai's voyage to become a global shipping center by 2020. China's remarkable trade boom is reflected in the Shanghai port numbers, which went from 7,951 TEUs in 1978 to 29.05 million TEUs in 2010. The city's customs oversaw a total of US$790 billion worth of imports and exports in the first three quarters of this year - a 19.3 percent year-on-year increase. And its port handled 23.9 mil...
Keep reading

Trade surplus falls as export reliance fades

CHINA'S traffic surplus fell by 6.4 percent in 2010 from a year earlier after supervision efforts to enlarge imports as well as revoke faith upon exports. The General Administration of Customs pronounced a surplus had been cut to US$183.1 billion. The proportion of surplus to total traffic worth declined to 6.2 percent in 2010 from 2009's 8.9 percent as well as 2008's 11.6 percent. Trade worth finished during US$2.97 trillion in 2010, a surge of 34.7 percent from a year earlier. Exports increasing 31.3 percent to US$1.58 trillion, whilst imports jumped to US$1.39 trillion, up 38.7 percent year-on-year. "While a lot of uncertainties still exist in a external world, China is correct to accelerate a gait of a economic restructuring as well as rely less upon exports," pronounced Xue Jun, an researcher during CITIC Securities Co. Both exports as well as imports shot to a jot down high final month. Exports in Dec increasing 17.9 percent upon an annual basis to US$154.1 ...
Keep reading