A Study On The Legal Problems Of Villages And Towns In China

In order to solve the low coverage of banking outlets, the financial supplyshortage, inadequate competition and related problems in the rural area. China beganthe incremental reform of financial institutions at the end of2006. Rural bank is thedominant force pilot in the current round of new-type rural financial institutions. Upto now, China had established more than100rural banks and the number continues togrow.The emergence of rural banks brought new hope to the long existed ruralfinancial problems from the reform. Rural banks take the commission of supportingagriculture, and it possesses the nature of the rural communities of small commercialbanks. Comparing the inadequate supply for the rural commercial market with thepotential demand is substantive elements for its development. As rural banks ispresenting newly in the financial industry, it has been restricting in the trial process,above all, the deficiencies in the legal system is the biggest challenge. Currently, therural banks of the legal institutional framework primarily consists of the "ProvisionalRegulations on Management of Rural banks," and other relevant laws andregulations.Although the current legal system supply the basic support to the normaloperation of rural banks, but in the bank’s risk control and survival control legalsystem has many imperfections, mainly for the compensation mechanism for riskdiversification not healthy and immature regulatory system, which will bound ruralbank for development and sustainable operation of their future a significant negativeimpact.To this end,the intensive consolidation is on a high demanding for the currentcomplex system, contingency is a strong sense of various rules of, timely adoption oflegislation or administrative regulations issued in the form of improving its legal form,in the legal system optimization and integration framework based on the constructionand improvement of rural banks operation of the legal system. Risk control, toincrease the supply of government policy to support efforts to make it safely through a start-up phase, the establishment of social credit system to address the rural bank forrural services, the asymmetric information problem. At the same time, diversificationof business models to establish the agricultural in surance system and theimplementation of the principle of limited pay the mandatory deposit insurancesystem. Link in the collateral, to the right of rural land contracting mortgage reform,the establishment of pilot primary land mortgage organizations, and "Panel+center"of Mutual security model for rural credit cooperatives by the current situation onlythrough the introduction of the relevant provisions under the promotion of to ruralbanks and other new-type rural financial institutions. These initiatives will benefit tothe dispersion compensation rural bank’s operational risk, its development secureprotection; in the supervising and monitoring factor, the related department need toabide by the flexibility of the costs, benefits matching and supervision of theregulatory diversity, strengthen the regulatory power of the restriction and supervision,regulators need a reasonable allocation of regulatory powers between, increasesupervision of the local regulatory authority. In the current basis of separatesupervision, improve the regulatory mechanism of inter-agency coordination andcooperation, explore the functional regulation of the pilot.Legal System in the specific design, to further relax restrictions on access torural bank, reform the banking market towns and villages way out, and strengthenrisk control and operations in advance of risk control, strengthening legal supervisionand program development. At the same time, through the industry self-discipline,social supervision and internal control mechanisms of the banks to improve bankingsupervision to build multi-village governance. At the early stage in the development of China’srural financial market, risk existing with opportunities, rural banks need to reform and innovationto adapt to the changing market environment, but also requires a sound legal system to provideeffective protection for their healthy growth, which is rural bank in China in the new round ofrural financial reform to play a main force of the premise.