Small Loan Companies Legal System

Small loan company is run by natural persons, companies or other organizationsapproved by the provincial finance department, administrative department forindustry and commerce registration incorporated to the main business of microfinanceLimited or Corporation. With the development of small loan companies, ruralfinancial system in our country ’s position has become increasingly important, notonly advantageous to promote rural economic development, but also to promote thecountry’s social capital into China’s financial market, thus improving China’s financialsystem. China Banking Regulatory Commission and the People’s Bank of Chinaissued "on the small loan company pilot guidance " in the small loan companies tomake provision for specific systems, in theoretical circles begin to focus on the legalregime of small loan companies, there had been many papers and some monographs,such as Chen Daisong teacher’s " small loan company Legal System." These theorieson the achievements of small loan companies certainly also discussed the small loancompanies gaps in the legal system. With the development of small loan companies,these statutes in the nature of small loan companies, small loan companies regulatedmicrofinance company’s sources of funding and other aspects showed deficiencies.Because the law does not recognize the one hand, small loan companies are formalfinancial institutions, on the one hand and the provisions of its engaged in loanbusiness. This contradiction resulted in the actual operation of small loan companiesencounter many problems. Such as mortgage registration, etc., even with somesolutions, but still not perfect resolve this contradiction. Hence the need of smallloan companies for determining the nature, relax under the existing conditions ofsmall loan companies into rural bank standards are the right choice. And supervision,there is no clear rank higher laws and regulations, but also no specific regulatorybodies, resulting in the regulation of small loan companies blur, there are manyplaces lax regulation, and in some respects too harsh. Small loan companies withinthe industry nor the formation of self-regulation, which is monitoring thedevelopment of small loan companies a major omission in the People’s Bank reportalso clearly stated that. This will require a special enactment for small loan companylaws and regulations, specifically dedicated regulatory authorities in order tostrengthen the supervision on small loan companies. Sources of funding, due to absorption of small loan companies are mainly social capital, while financialinstitutions financing from banks, but our regulations to make a lot of restrictions forsuch financing, small loan companies in the pilot period can indeed reduce financialrisks, but with the development of small loan companies, this requirement hasseriously hindered the development of small loan companies, and thus the need toexpand the registered capital, while also reducing the small loan companies to easilyrestrict banks to small loans with more money to play its value. Through theestablishment of a more comprehensive legal regime of small loan companies, tomake small loans to better serve China’s economic development momentum.