Study On The Legal Issues Of The Supervision Of Rural Bank Loans

In the process of the development of socialism with Chinese characteristics, speeding up the reform and innovation in rural financial system has been a top priority of the government work. Building a new socialist countryside, we must focus on the development of the rural economy, which can not be separated from the substantial support of the rural financial system. Although the rural financial system is still the weakest link in the financial system as a whole, however, with the further development of the rural financial reform, rural banks emerge as a new type of rural financial institutions. While the pilot rural banks are spreading rapidly, the government affords them a wide range of investment opportunities and development space. Although rural banks meet the peculiar needs of the farmers and small and medium-sized enterprises, there are still some problems existing which attract widespread public attentions, such as the management of credit risks, the phenomenon of being loaned, and the obscure functions and powers of Regulatory Authority. During the past six years. Therefore, in spite of evolving at a pilot stage, the supervision of the rural bank loans has great impact to meet the borrowing needs of the farmers, great significance for the development of the rural financial system, and the stability of the financial market.The nature of the rural bank attributes to small commercial banks in rural communities, the inherent vulnerability of the rural banks, the unpredictable nature of credit risk, the asymmetric information between farmers and banks, rural banks and the obvious tendency of the purpose of the rural banks, and the status of the rural banks in the rural financial market determine the necessity for the supervision of the rural bank loans, it is also necessary to weigh the economic identity of the rural banks as well as the particular demand of farmers, so that the rural bank can operate orderly.With the development of the rural banks across the country, the governments are taking positive measures to encourage investors to strengthen the rural banks. However, by inspecting the current situation of the pilot rural banks and the deficiency of the supervision of the rural bank loans, it clearly shows that the development of the rural banks are exposing to many problems:First, the absence of supervision legislation of rural banks loans, the choice of the Regulatory Authority, the lack of the Regulatory Authority as well as the defects of its function, and the incompatible coordination between the Regulatory Authority; Second, the concentration of the loan operation of the rural banks is excessive, the regulation of the information exposure is vague, the phenomenon of being loaned happens frequently, credit investigation and extension system are missing; Third, the existing supervision regulations are insufficient, the integration of on-site surveillance and off-site surveillance are not satisfactory, and also has not been well implemented, moreover, the convergence of the regulatory approach is not conducive to effective supervision of the rural bank loans. After studying on the development of the microfinance banks abroad, taking the regulatory model of the rural banks in Bangladesh, as well as the community banks in United States as an example. By analyzing the regulatory legislation, regulatory principles and regulatory environment of the rural bank in Bangladesh, as well as legislation of community banks and government external supervision and internal control in United States, based on the foreign regulatory model of bank-like institutions, these provide us a lot of inspiration:completing and promoting the relevant supervision legislation of the rural bank loans, relaxing appropriately the lending rates, the feasibility of the Regulatory Authority. Combining with the current status of the rural bank loans, referring to foreign experience, improving the legislation of the rural bank loans, and setting up special legislation for Chinese rural banks, established regulatory principles and regulatory purposes that is suitable for Chinese rural banks; improving the market positioning of the supervision of Chinese rural banks, determine the concrete regulatory authorities of the rural bank loans; optimize the operating process of the rural bank loans, including the improvement of the control of interest rates, the optimization of the credit extension mechanism, the establishment of incentive mechanism, improving the information disclosure procedures; innovating means of services, formulating new methods of supervision, so that promoting and perfecting the service of the rural bank loans substantially.