| Research on Small-sum Loan Companies (SLC) has become a paramount topic alongwith the government’s struggling against breaking the financial reform predicaments. TheCentral bank has been conducting a trial with7private SLCs in less developed areas inmid-west of China since2005, which signified the emergence of SLCs on financial stage. Endof June2012, the number of SLC in entire nation has reached5267with a loan balance ofRMB489.3billion. With the rapid development of the industry, SLCs are confronting lots ofproblems, among which the legal system construction became one of the most essential one,and needs to be settled urgently.It could be concluded that the main legal obstacles of SLCS industry are as below afteron-site investigations and collection of relevant materials had been conducted in GuangdongProvince.ⅰLegal problem related to the SLCs’set up issues.ⅱLegal problem related to Operation of SLC.ⅲLegal problem related to Supervision and Regulation of SLCs.Solutions to above issues are also suggested.ⅰProblem on SLC setup is largely relied on legal positioning and system structuring. Itis a paradox between the current defect regulation and high requirements of supervision. Thefeasible way to solve this problem is through consistent improvement of regulations andloosening of current supervisory control.ⅱOperating problems of SLC are able to be resolved by expanding financing channel,and lifting financing leverage ratio. It is also important to establish regulations to help SLCsenhance risk identification and risk control capability, and build up internal control system.Besides, leading the market to healthier direction by accelerating the legislation processshould be encouraged, and it is of same importance as product and technique innovation.ⅲSupervisory and regulatory problems could be dealt with by bringing SLCs into therange of non-banking financial institutions and put them under the supervision of ChinaBanking Regulatory Commission and the People’s Bank of China. |
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