Research On Legal Regulation Of Rotating Savings And Credit Association In China

Rotating Savings and Credit Association(ROSCA) belonging to a kind of spontaneous financial form is a traditional folk financial form in China. It is a way of financing, and it refers to the people who in need of money gives others an invitation to form a group. According to the promise, these people will pay a certain amount of money each time, and determine the order to use the money promised in the form of contract until everyone in the group gets the money(one people only gets the money once), then the group disband. Compared with other folk financial form, ROSCA has its tenacious vitality and irreplaceable advantages. It’s the important source of funds in the initial period of our small and medium-sized and small micro enterprises. However, the legal status of ROCSA is unclear, making it “outside the system” run. The attitude of government towards it changes when the policy fluctuates. Meanwhile, with the inevitably inherent risks and vulnerabilities of ROSCA itself, ROSCA’function has been instable, uncontrollable and irregular. And under the strong shock of commodity economy in recent years, ROSCA ’ development appears different degree of variation phenomenon, which makes it not the traditional form. Because the initial mutual assistance is undermined, ROSCA become a form of interests-driven, making it a malicious arbitrage fund behavior. The original mutual funds behavior becomes into a money game. As a result, the failure of ROSCA on a large scale leads its development into a vicious circle. It not only influences local economical development but also has a negative impact on financial security. At last, it gives social stability a bad effect. Legal regulation of ROSCA in extraterritorial area shows that the legal status of ROSCA should be clear, the legalization should be realized and the risk prevention should be strengthened. Combining with the experience outside, we can find ROSCA and its legalization problems existed in our country. So the recommendations to make the legal regulation of ROSCA perfect is as followed: Firstly, build the legal regulation system of ROSCA in our country, give it a legal status and then make the tireless efforts in the road to realize ROSCA’s codification. Secondly, define the rights and obligations of the people who participate ROSCA in a clear legal form. Thirdly, make the regulatory system of ROSCA perfect and combine with external regulation when making full use of internal self-regulatory. Fourthly, establish legal risk prevention mechanism.Fifthly,recognize the inevitable risk existed in ROSCA and improve its disposal mechanism afterwards.