In 2008, the former CBRC issued the Guiding Opinions on the Pilot Project of Small Loan Companies (hereinafter referred to as the Guiding Opinions). 12 years later, Document No.86 gave a new definition to the business scope, loan purpose, loan interest rate and financing channels of small loan companies.
"If you relax, you may not be able to integrate capital."
However, in the Guiding Opinions of 12 years ago, there were no provisions on financing means such as shareholder loans and asset securitization.
At that time, the Guiding Opinions proposed that the balance of funds that small companies can obtain from banking financial institutions should not exceed 50% of their net capital. In other words, the supervision has now relaxed the financing leverage of small loan companies, and the leverage ratio through banks has been relaxed from 0.5 times to/kloc-0 times, while the leverage ratio through standardized financing means such as asset securitization is four times.
In fact, limited financing leverage has always been an important factor limiting the development of small loan companies. In recent years, local financial supervision bureaus have also formulated a supervision rating system for small loan industry according to local actual conditions. For example, in 2020, Guangdong regulators classified small loan companies into eight grades: AAA, AA, A, BB, B, C, D and E according to the rating results. In terms of financing leverage, small loan companies with AAA level (including AAA+ and AAA) can relax external financing, and the balance does not exceed 5 times of net assets (including 2 times of non-standardization and 3 times of standardization); Small loan companies with AA level (including AA+ and AA) can relax the balance of external financing to no more than 4 times of their net assets (including 2 times of non-standard and 2 times of standard).
For example, on 20 19, Hunan formulated the Measures for Classified Supervision and Rating of Small Loan Companies in Hunan Province. The higher the rating, the greater the proportion of external financing allowed. The investigation results are divided into four categories: A-level companies can be included in the annual assessment and reward of financial institutions by provincial governments, and the financing ratio can be enlarged to 300% of net capital; Companies with Grade C or above can enjoy the allocation of financial risk compensation funds; D-class companies suspend external financing.
Are small lending institutions private lending?
On August 20th, the Supreme People's Court officially issued the newly revised Provisions of the Supreme People's Court on Several Issues Concerning the Application of Laws in the Trial of Private Lending Cases. Based on the one-year loan market quotation (LPR) issued by the National Interbank Funding Center on the 20th of each month, the upper limit of judicial protection of private lending interest rate was determined, replacing the original provision of "two lines and three districts based on 24% and 36%". The upper limit of judicial protection of private lending interest rate is 15.4%, which is four times the quoted interest rate of one-year loan market released on the same day, which is significantly lower than the previous 24% and 36%.
On September 4th, China Association of Small Loan Companies issued a notice calling on the whole small loan industry to carry out interest rate pricing discussion. Focusing on "microfinance companies are profit-making legal persons established by financial supervision departments according to law to operate lending business, and their business behavior does not belong to private lending;" We should fully understand the important role and social contribution of microfinance companies in supporting the development of inclusive finance.
Are small lending institutions private lending? Is it necessary to follow the private lending rate 15.4%? Xiao Sa, director of the Bank of China Law Research Association, believes that the first article of Circular 86 emphasizes that small loan companies are engaged in financial business, and the subtext is not private lending. Ceng Gang, director of the Banking Research Office of the Institute of Finance, China Academy of Social Sciences, also said that the introduction of the CBRC's regulatory rules proved to some extent that small loan companies are the main body of supervision. As the main body of supervision, small loan companies cannot be said to be private finance outside the supervision system. Circular 86 is at least a good support for the small loan company industry.
As for Circular No.86, there is no very clear statement about interest rate, but it is stipulated that interest rate should be "reasonably determined": microfinance companies are not allowed to deduct interest, handling fees, management fees, security deposits, etc. Advance payment from the loan principal. If they deduct money in advance in violation of regulations, they should repay the money and calculate the interest rate according to the actual loan amount after deduction. Encourage small loan companies to lower the loan interest rate and reduce the financing cost of the real economy.