The Research Of Small Loan Company's Legal Risk And Risk Prevention

Private small and medium-sized enterprises in our country are facing with the financing difficult for a long time,which has become a block in realizing the further development of our country's economy and people's richness.At the same time,the coverage of formal financial institutions for agriculture,rural areas and farmers customers is difficult to meet the needs of agricultural development.Small loan companies in our country can ease the financing needs of agriculture,rural areas and farmers customers and small and medium-sized enterprise customers in some aspects,but at the same time,it is facing with several kinds of legal risk itself,how to deal with these risks effectively is related to the survive and long term profit of small loan company,and the development of industry that relay on its financial support.China's small loan companies are a type of microfinance institution in the world,the nature of small loan company is a company that operates on funds.The microfinance movement originated from the rural finance experiment of Bangladesh conducted by Professor Yunus in 1970 s.The direct result of the experiment: Grameen Bank,has become the most famous microfinance institution in the world.This model was followed by many developing countries in South Asia and Latin America.The large-scale emergence of small loan companies in China began in 2008 with the issue of <Guidance on small loan companies>.After nearly a decade of development,there are currently more than 8,000 small loan companies nationwide,and the balance of loans are early one trillion yuan.From the point of view of the reasonableness of interest,small loan companies are essentially a company that operates on funds and should not be regarded as “alien” at present.China's existing regulations and policies limit the funding of small loan companies to shareholders' investments,social donations,and a limited proportion from bank.The legal restrictions on the source of funds make it possible for small loan companies to fall into the risk of illegal funding sources.The credit risk issue will also challenge the sustainable profitability and development of small loan companies.The credit risks is a result come from both the target customers and the current credit conundrum of small loan companies.In addition,the internal operations and management often fails in controlling risks.To solve the problems above,this paper summarizes the experiences of various countries and combines with China's actual situation,puts forward some targeted measures.To prevent the risk of illegal funding sources,small loan companies should not break the law,and except implementing the bank financing,it is also necessary to innovate the financing method within the limits of the law and use bond issuance and other means to raise funds;For credit risks,the most important thing is to speed up the process of small loan companies' full access to the central bank's credit information system.At the same time,we must strengthen the education of social credit and the legal system.In addition,we must also take the form of legislation to take into account safety and efficiency.To strengthen supervision,the company itself must also strengthen the company's internal governance structure,improve the management level,and avoid the occurrence of various operational risks.Small loan company is an important direction of China's financial reform.They have the positive effect of revitalizing private capital so that they can be used to build production.We should support their development with an open attitude,but not to regard them differently and suppress.However,while the government is acting the ‘night watchman' in the market,it must also prepare for the possibility of outbreaks.This is also the basic view of the “Need Government's Intervention” in economic law.