On The Legal System For Small-loan Companies In Hainan's Rural Areas

As a big agricultural country, the development of agriculture is closely related to China's social stability and prosperity. The development of modern agriculture, the growth of agricultural productivity and the increase of people's income can not do without the support of the rural financial system. For a long time, China has been committed to the rural financial system reform, but with regards to the financial needs in the construction of new countryside and the "three rural" development, there is still a significant shortage of the supply of rural finance. The shortage of funds has become a constraint to the agricultural economic development, and it delays the development process of the economy in rural areas. As the large state-owned commercial banks withdraw some business networks in the rural areas, the means for rural credit cooperatives and postal savings banks are quite limited, and risk for agricultural loans is rather high due to the influence of the natural factors and the markets, it is hard for the farmers to get loans from such financial institutions as banks. Luckily, the emergence of small-loan companies helps to break this bottleneck, and it effectively alleviates people's difficulties related to the lack of production funds, transfers and disperses the bank's credit risk, and at the same time breaks the rural credit cooperatives'dominant role in rural areas finance and activates the rural financial markets. It has become the main channel for rural financing and made remarkable achievements in such aspects as reducing difficulties in"three-rural"loans, helping to increase the agricultural production and farmers'income as well as promoting the economic development in rural areas. The government of China also pays more attention to the small-loan companies in rural areas.Small-loan company plays a positive role in activating the financial markets in the county and rural areas, but along with the development of its business, there is a lack of sound legal system to support such issues as the nature, legal status, organization activities, the way to reduce risk, and the like. It only relies on some departmental rules, regulations, guidance opinions, and management methods to standardize its management practices, which has become a major obstacle for the sustainable development of micro-credit in the future. So the small-loan companies have an increasing demand on a stable legal system. Therefore, it is significant to perfect the present legal system, strengthen the legal support for small-loan companies to promote its healthy development and give a full play to its basic role in allocating market resources, establish and maintain a healthy, stable and standardized rural financial order, and create a favorable environment for the development of rural financial reform.In this paper, the writer starts from the background of the small-loan companies in China's rural areas to introduce the business model of Yunus microcredit and its development in Hainan, illustrate the development status quo of the rural small-loan companies in Hainan, analyze the deep-seated reasons for the slow development of small loans in Hainan's rural areas, and puts forward corresponding ideas and suggestions.