On The Legal Protection Of Small Loan Companies In China

In 1994, the Grameen Bank of Bangladesh's micro-finance model was introduced to China. Since 2000, as the main formal financial institution, Rural Credit Cooperatives began to try and promote micro-credit. The development of micro-credit in China began the formal financial sector-oriented stage. At present, various financial means that have already existed can't contain the whole financial market, especially the rural financial market. Since the end of 2005, People's Bank of China (PBC) creatively set up several micro-credit organizations as pilot projects in 5 provinces. The emergence of small loan companies is the inevitable results of the adjustments made in fiscal and monetary policy and results of the current financial market.The small loan company produces desirable effects on the relief of difficulties in the financing of rural residents and the small and medium-sized enterprises, the allocation of financial resources, the refinement of rural financial service, the enforcement of the competition of rural financial markets, the enhancement of the development of agriculture and rural economy and the promotion of the socialist new rural construction. The small loan company meets the interests of multi aspects, but as a new organization, the small loan company has met many legal difficulties in reality. How to perfect the relevant laws and regulations for the small loan company? How to find the legal outlets? To address these questions will doubtlessly contribute to the healthy development of the small loan company in our country.By employing macro-analysis and comparative methods, this paper deals with the small loan company in China. It is divided into three parts. The first part starts with the introduction of the two main micro-credit models, with a view to provide a reference to the development of China's small loan companies. And then it gives an overview of the background of the small loan company's establishment and its features, as a basis of the in-depth research. The second part begins by describing the current operation and the legal situation of the pilot small loan companies, followed by the analysis of problems existing in the pilot, such as the low level of legislation, the unclear legal status, and the imperfect supervision system, impediments to sustainable development, etc. In the third part, possible solutions are correspondingly provided based on the above-mentioned impediments.To improve the micro-credit mechanism in law and complete the clause of the operating, the law will be made to recognize the small loan company as a non-banking financial institution; as to the problem of transition, under the premise of ensuring the small loan company's congenital advantages, it can be turned into private banks; the CBRC as the regulatory body should be clarified and a flexible and effective system of supervision should be built so as to develop the small loan company better and faster and to ensure its continued healthy operation.