Research On The Ways To Consummate The Legal System Of Petty Loan Company

As a kind of new financial innovation, Petty loan company refers to the limited company or joint-stock company which is invested and set up by natural persons, enterprises as legal person and other social organizations, whose sphere of business can only be petty loan, and which is not allowed to handle savings. Its experimental work started in 2005 and the existing data shows that it has succeeded. In a manner of speaking, private capital has been keeping high enthusiasm on developing petty loan company since its experimental work. Up to now, the petty loan companies in whole country have entered a period of rapid development in terms of quantity and size. Its functions of expanding financing channels for the majority of rural areas, small and medium enterprises, and individual businesses, guiding the development of the private capital on a normative road, and solving the problem of employment of population is gradually reflected. However, petty loan company is in a stage of experiment, as a result, the normative documents, such as Pilot Guidance on Petty Loan Company and Interim Provisions of Restructuring Petty Loan Companies into Rural Banks either had no regulations or regulated in a unreasonable and framework way. Therefore, the legal system related to inadequate or lack of petty loan companies has become its development bottleneck. To construct an appropriate legal system and to promote its development in a healthy and sustainable way has become urgent. Based on the general theory of microfinance and successful models of microfinance abroad with the introduction to their legal system, policy interpretation on petty loan companies in our country, and the analysis of development of our country's petty loan companies, the paper makes several suggestions as to construct the petty loan companies'legal system from the following aspects: the legal nature of petty loan companies, regulations and legal system of regulatory institutions, policy support and the construction of internal management, with the respect of promoting petty loan companies to develop healthily and continuously.This paper is divided into three chapters. The first chapter is an overview of petty loan companies, which is divided into three sections. Section I is a general introduction of the definition and objectives of microfinance, successful models of microfinance abroad with the introduction to the experience of their legal system, our process in the development of petty loan companies; Section II is the general elaboration of petty loan companies from its concept, legal value and characteristics; Section III is the general introduction of process of petty loan companies, which is described from two aspects, that's to say, our country's general policy and present development status. The second chapter is an analysis of the existing problems of petty loan companies in the legal system, which is divided into two sections. Section I is the problems arising from the petty loan companies themselves, as a result of its legal system design. In details, the problem is caused as a result of the following aspects: the sphere of pure loan and no savings, limited business scope, financing channels, single and state-related interest rates and tax policy, and many other aspects of the irrational policies, which cause its own legal system to be further promoted or regulated. Section II is the problem, of which the petty loan companies encounter in the course of the actual operations, mainly in such areas like the internal control system, regional differences, local government administrative intervention. The third chapter which can be said to be the focus of this paper, is several proposals to achieve sustainable development of petty loan companies. The proposals should be a total of three points: The first one is to create external legal environment, which is favorable to its development; The second one is to create a favorable petty loan companies' external policy environment from the lifting of restrictions on interest rates, tax incentives, relaxation of financing and access conditions; The third one is the petty loan companies'internal management system, which should be amended from the aspects of human resources strategy and internal control system.