Y Bank's Case Research Of PPP Project's Credit Extension Risk Management Of B Company

The public-private partnership(PPP)is a cooperative and win-win financing model that,based on government franchise agreement and through the community relation-“benefit sharing,risk sharing and full cooperation”,transfers part of the responsibilities of the government to social subjects in order to reduce financial burden of the government and lessen the investment risk of social subjects.Owing to the increasing demand for public goods and services in the context of continuous urbanization in recent years,the financial burden of government is rising as the main provider for public goods and services,and the state unceasingly reaffirmed the debt management of local government that should be strengthened.Therefore,PPP model turns into the main model of project financing from central government to local governments at all levels.Also,the policies have been introduced one by one to support and regulate the development of this model.To be a newborn financing model and due to the policies changed rapidly,the commercial banks generally have various concerns,which lead to the low rate of successful PPP project financing.This paper analyzes the basic process of project loan credit,current situation of risk management and requirement for credit of Y Bank,as well as the specific situation of PPP project financing credit accepted by Y Bank for B Company regarding fast-track engineering on LH Road.Through this case,from the two perspectives-compliance and credit risk,the comparative analysis is conducted for the difference between this case and internal and external requirements of Y Bank.The problems that are with no in-depth analysis for compliance of PPP project operation,over credit extension,excessive reliance on the first repayment source and short of the second repayment source,out of duty in several positions and lack of evaluation from professional risk department in PPP project financing of Y Bank are unveiled.The reasons why the above-mentioned problems are being are analyzed in depth.On the one hand,in Y Bank,the risk management mechanism of internal credit business is imperfect and the construction of risk culture is missed.The supervision for duty performance of post is poor and the business ability and learning ability of employees are not strong enough.On the other hand,in external factors,the parties involved in PPP project are in dominant group.The completion for PPP project amid the banks is fierce.The present legal system and social credit system are not perfect.And the optimization strategies are put forward to the point.It can be concluded that,through the study of this paper,Y Bank should establish a professional talent team and management system.In accordance with the changes and regulatory requirements of governmental policies,for the links such as establishment,implementation,operation,transfer and others of PPP project,the professional and dynamic risk management concept should be built within the full life cycle so as to lay foundations for the expansion of business scale,promotion of market share and improvement of risk management level.While enhancing the cooperation with financial partners,rating agencies,accounting and auditing institutions,the level of risk management should be promoted in post loan management,loan agreement and information system.The constructive suggestions are provided for Y Bank in the financing process of PPP project in this paper and can be referred as and used for reference by other financial institutions as well.