Microfinance Companies Remain Promising in China, Reports China's Economy & Policy-Gateway International Group29 Jun 2012 • by Natalie Aster
Microfinance Companies mainly provide small, scattered, and short-term funding for enterprises and individuals. Since the China Banking Regulatory Commission (CBRC) and the central bank issued Guidance on Microfinance Company Pilot in 2008, the microfinance industry has entered a period of rapid development in China. Microfinance companies, among so many micro-credit institutions, are growing to be an important component and backup in the domestic micro-credit market.
The new report "Microfinance Company Development in China" by China's Economy & Policy-Gateway International Group states that the latest statistics released by the People’s Bank of China show that up to the end of March 2012, there were 4,878 microfinance companies in China, with a total loan balance of 444.7 billion yuan, increasing by 53.1 billion yuan in the first quarter alone. The paid-in capital of microfinance companies totaled 387.1 billion yuan and they had 53,501 employees. The top three areas in the country, the Inner Mongolia Autonomous Region, Jiangsu Province, and Anhui Province, respectively have 424, 413 and 377 microfinance companies.
Microfinance Company Development in China
Published: May, 2012
Price: US$ 200,00
Microfinance companies are a new and special enterprise engaged in the financial business. In the current special economic and financial situation, the major problems for microfinance companies are as follows:
First, profit levels are low. Downward pressure from the Chinese domestic economy, changes in the market environment, and looser international monetary policies, have all resulted in a lack of effective borrowing demand. Meanwhile, microfinance company customers, who are unable to qualify to get loans from banks, lack the ability to effectively resist risk. Furthermore, according to current policy, microfinance companies are taxed in the same way as ordinary industrial and commercial enterprises, including a 25% enterprise income tax and a 5.56% sales tax, along with extra charges, which are much higher than the tax levies on rural credit cooperatives and general financial institutions. It is calculated that, after deducting taxes and operating costs, the return on net assets for microfinance companies is about 5 to 8%, much lower than the expected return for most shareholders.
Second, supporting policies have yet to be implemented. Although the microfinance companies can carry out the same lending business as banking financial institutions, they cannot enjoy equal treatment in handling tax collection, land mortgages, chattel mortgages, and other rights mortgages, because they are identified.
More information can be found in the report “Microfinance Company Development in China” by China's Economy & Policy-Gateway International Group.
To order the report or ask for sample pages contact firstname.lastname@example.org