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Small loan companies issue loans in registered capital flight or in disguised form in registered capital flight. Small loan companies have off-balance sheet business. Small loan companies issue loans to industries explicitly prohibited by their shareholders and industry authorities. Small loan companies engage in external guarantee business, cross-regional business, business beyond the scope of business, and issue large loans in excess of the proportion. Acts prohibited by laws and regulations of its users and competent departments.
2. Is the microfinance company a legitimate company?
Micro-loan companies are independent legal persons approved by provincial government departments and obtained business licenses in the industrial and commercial departments. So it does not belong to financial institutions. However, small loan companies are performing the functions of financial institutions by operating money and issuing loans, which makes them embarrassed in their identity, resulting in the following disadvantages: deposits in banks are only implemented according to the deposit interest rate of ordinary industrial and commercial households, far lower than the interbank deposit interest rate of financial enterprises, and they are not deposited in the central government.
To sum up, because microfinance companies are not financial institutions, it is not conducive to the maintenance of their financial claims. Because microfinance companies are not financial institutions, they can neither enjoy the preferential tax policies of financial institutions nor enjoy various financial subsidies from rural financial institutions, but pay taxes according to ordinary enterprises, resulting in a heavier tax burden for microfinance companies.