Study Of Microcredit Risk Prevention

The microfinance is business loan for people and self-employed and small enterprises,the core of microfinance is individual or family. As the basis for commercial bank credit business,microfinance has become an important source of income for banks. By providing the credit support to people who has poor rating level and economic conditions, the microfinance is good for helping them to get rich.Postal Savings Bank of China has been focused on the development of microfinance since its inception, microfinance has become an important way for Postal Savings Bank to support the rural economy and increase the influence of its product. On the one hand, microfinance can meet their capital requirements relating with agricultural production or other production and business activities through providing small amount credit to farmers. On the other hand, microfinance can meet their capital requirements of production and operation through the way of providing credit support to private entrepreneurs and commercial households, who engage in the production, processing, trade, services and other activities.The S branch has been adhering to the principle of serving for local economic development since it offered microfinance business in2008. The S branch strives to expand its business scope and regional influence through relying on local economic characteristics. Currently, it offers four kinds of microfinance product:guaranteed loans of farmers, group lending of farmers, guaranteed loans of merchants, group lending of merchants. After years of effort, the S branch has not only fulfilled the transition to a modern commercial bank,but also playing an irreplaceable role in the development of local economy. However, With the continuous expansion of the scale, microfinance overdue issues has become a big problem in the development process and one of the main factors affecting the quality of credit assets. Microfinance business majorly faces credit risk, operational risk, market risk, legal risk and other risk. We know the S Branch takes the sound development of microfinance as a goal, but to achieve this goal, it has to emphasis on microfinance risk system construction and handle the relationship between business development and risk management.Microfinance business risk management of the S branch is selected to study in this paper. Firstly, the definition of microfinance its characteristics are analyzed and interpret several types of risks faced by microfinance business. Besides, research on risk management system is established on the basis of Asymmetric Information Theory, Signaling Theory, Screening Theory and Principal-agent Theory.Then. Relying on the actual operating conditions in S branch, there is a brief analysis of the status relating with the development and risk management business of microfinance. This section covers the following aspects:a brief introduction about four kinds of microfinance products, seven types of elements of microfinance products, microfinance operational processes, microfinance business features of S branch, microfinance business size and business structure analysis, certain provisions of the microfinance business processes, quality of microfinance services.After the first two parts of the discussion, this paper uses examples of analysis and summarize law, it takes three types of overdue loans as example, that is group lending of merchants, guaranteed loans of farmers, guaranteed loans of merchants. Through a complete analysis of loan process, driving problems about the microfinance business risk management system from the business process, credit rating system, financial analysis system respectively. Survey information before the loan is not complete, credit staff lack the knowledge and experience of credit, the audition of report is not comprehensive, no credit checks put in place after lending. Evaluation index system of credit evaluation is unreasonable, emphasis on solvency needs to be improved. Indicators that are based by the highest monthly repayments are single, balance Sheet failed to play its due role.Finally, the article concludes three types of questions based on the analysis of cases, and propose several perfect recommendations in order to improve risk management system of S branch, these recommendations involves four respects, that is microfinance business procession, the credit rating system, financial analysis system, human resource development. Specifically. Strengthen pre-loan investigation and the risk identification during the part of pre-loan. Relate the loan review and approval in order to play the role of risk management and control. Refine loan management after lending and strength the risk management when the credit is given. Improve the credit rating evaluation system. Establish a database to improve the credit rating system. Introduce the cash flow analysis indicators about profitability and solvency in order to improve financial analysis model. Bring up the culture of risk management and train the awareness of risk. Improve the quality of credit practitioners and strengthen human resource development. I hope the study of micro-credit risk management system play a reference role in the future development of microfinance in the S branch. So that the risk management of S branch can be improved continuously, and enhance the capability of risk management, Lowing the rate of micro-credit overdue so as to guarantee the sustainable development of microfinance.