China legalizes private lending in Wenzhou
Updated: 2014-02-28 17:14
(Xinhua)
|
|||||||||||
WENZHOU, Zhejiang - China will start testing the waters of legalized private lending on Saturday in the pilot city of Wenzhou, where a liquidity crunch in underground lending in 2011 caused a credit crisis.
|
|
Zhang Zhenyu, deputy secretary-general of the municipal Communist Party of China Committee and head of the city's finance reform office, told Xinhua Friday that detailed rules of the regulation, which were finalized this week, will take effect on Saturday along with the regulation.
The Wenzhou Private Financing Regulation, passed by the Zhejiang Provincial People's Congress in November 2013, says that enterprises in need of funds can borrow private loans via three kinds of intermediary agencies, including private capital management firms, financing information service firms and lending service institutions, which are still not part of the formal financial system elsewhere in China.
Wenzhou's lending service institutions emerged in 2012, when the State Council approved a broad package of financial reforms allowing Wenzhou to serve as a testbed for liberalizing private lending, which had grown into a colossal underground industry, powered by the robust growth of the city's private economy.
These institutions keep record of lenders who lend over 3 million yuan (about$500,000) in a single private loan and collective loans with a combined value of over 10 million yuan.
There are currently seven such service centers in Wenzhou. By Dec 12, 2013, they had registered private capital of 7 billion yuan, with 2.5 billion in outstanding loans.
Wenzhou also has 11 private capital management firms, which specialize in offering financial services from private placement to project investment. By December, they had directed 2 billion yuan in private funding for investment in 618 commercial projects.
Zhu Zhongming, vice mayor of Wenzhou, said the city has set up an administrative system to regulate private financing activities. It is composed of a financial management bureau, a financial arbitration institution, a financial crime investigation team and a court.
The new regulation, with 7 chapters and 50 clauses, specifies regular private financing operations, risk control measures and legal liabilities.
Related Stories
Guizhou's first private lending service center opens 2014-02-28 09:32
Wenzhou breaks new ground on private lending 2013-11-23 10:18
Private lending disputes to increase 2012-07-13 09:29
Zhejiang private lending disputes on the rise 2012-07-12 10:49
Private lending in Wenzhou falls 2012-05-17 14:05
Private lending shrinks in Wenzhou 2012-05-14 15:25
Today's Top News
Armed men seize govt HQ in Ukraine's Crimea
Xi looks to a nation of cyberpower
UK, Germany at odds on EU reform
Asset theft is top economic crime
New Ukraine ministers proposed
Attemped attacks on chemical convoy
Guitarist Paco de Lucia dies
US senators scold Swiss bank in tax spat
Hot Topics
Lunar probe , China growth forecasts, Emission rules get tougher, China seen through 'colored lens', International board,
Editor's Picks
Mandarin or dialect? |
Landing scare grounds homemade planes |
Scientists search for clear answers on smog |
Safeguarding China's sunken riches |
Banknote buys new vision of history |
Death of panda spurs concerns |