Construction Of Legal System For The Supervision Of Chinese Loans

The main financing method in China is the bank loan, which can not meet thefinancing need of the market, under imbalance between the supply and the demand,the private lending market has quickly developed.But while the private lendingmarket satisfy the the financing need of the market it also leaves potential risks.Private lending need to be regulated by the law. The " Lending Ordinance "which wasdesigned for this purpose did not be able to pass. Japan formulated " Money LendingBusiness Act " in1954devoted to regulate the professional operators in the privatelending industry. This article will compare " Money Lending Business Act " and "Lending Ordinance " and try to find the inspiration from " Money Lending BusinessAct " for “lending Ordinance ".Chapter one describes the current situation of China’s private lending industry,as well as the legal regulation. Currently the private lending industry has achieved arapid development and a large scale. The first reason for that is the governmentintervene the lending rate and credit quotas of the bank, resulting SME financingneeds can not be met. The second reason is the increase of the private wealth andinvestment demands. The Supreme Court has identified the lending between twocompany illegal, other private lending legal. But the local high Court has identifieddifferently by the local court guidance.Chapter two introduces and analyzes the development of the lender’sregulation.Currently there are mainly three kinds of legal private lenders: consumerfinance companies、small loan companies and loan companies.This article brieflydescribe the developing background and the content of "Lending Ordinance ",andproposed inadequacies "lending Ordinance", the capital barriers of entrance are toohigh, the interest rate cap is inappropriate, the monitoring system for the financingchannel of the lender has not been established, regulatory agencies are not clear, thelack of regulation about the lender’s business behavior.Chapter three analysis of emendations of Japanese " Money Lending BusinessAct," and the enlightenment to China.“Money Lending Business Act” emended twice in2003and2007,mainly about the regulation of the lenders and the borrower’smultiple debt problem.The enlightenment are establish the lender’s registrationsystem,lower the capital barriers of entrance,set up the industry professionalqualifications,set up a system to protect the borrower,including the limitation of theloan and the interest cap.but use the market interest rates for the SME’s loan.Chapter four summarizes the contents of the article, summarizes the " MoneyLending Business Act " and the enlightenment for China lending industry norms.