The first mention of "inclusive credit" to meet the needs of small and micro finance in the "three rural" areas

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Reporter Lu Hongxing

Recently, the State Administration of Financial Supervision and Administration issued the Notice on Doing a Good Job in Inclusive Credit in 2024 (hereinafter referred to as the "Notice"). The "Notice" pointed out that in 2024, inclusive credit work should deepen the structural reform of the financial supply side, optimize the allocation of financial resources, form an inclusive credit service system compatible with the development of the real economy, and better meet the diversified financial needs of small and micro enterprises, agriculture-related business entities and key assistance groups.

Inclusive credit is a pragmatic measure to do a good job in inclusive finance

"This is the first time that the regulatory authorities have put forward the concept of 'inclusive credit', which includes small and micro enterprises, agriculture-related business entities, individual industrial and commercial households, and key assistance groups. The core of inclusive finance is to enable the weak links in economic and social development and the disadvantaged groups to enjoy equal financial services. The concept of 'inclusive credit' is a pragmatic measure to do a good job in inclusive finance, and an important embodiment of the people's nature of financial work. Ye Yindan, a researcher at the Bank of China Research Institute, said in an interview with a reporter from the China Economic Times.

In Ye Yindan's view, compared with the previous concept of "inclusive small and micro enterprise loans", the concept of "inclusive credit" has a wider coverage, better structure and more favorable price. Inclusive credit is aimed at groups with relatively low credit ratings, with a small single amount and a high overall risk. In order to solve the worries of financial institutions and make them dare to lend and be willing to lend, the "Notice" focuses on enhancing digital operation capabilities, implementing the detailed due diligence exemption system, deepening information sharing, etc., so that the policy can be truly implemented.

At present, micro, small and medium-sized enterprises and agriculture-related business entities are still facing great operating pressure, and policies need to further increase support for these business entities to help accelerate economic recovery.

According to data from the State Administration of Financial Supervision and Administration, as of the end of 2023, the balance of inclusive small and micro enterprise loans was 29.06 trillion yuan, a year-on-year increase of 23.27%, 13.13 percentage points higher than the growth rate of various loans. The balance of inclusive agriculture-related loans was 12.59 trillion yuan, a year-on-year increase of 20.34%, 10.2 percentage points higher than the growth rate of various loans. The balance of loans in 832 poverty-alleviated counties was 12.3 trillion yuan, up 14.7 percent year-on-year, and the balance of loans in 160 key counties for rural revitalization was 1.9 trillion yuan, up 15.85 percent year-on-year.

In an interview with the China Economic Times, Zhou Maohua, a macro researcher at the Financial Market Department of Everbright Bank, said that the "Notice" is a concrete implementation of the State Council to promote the high-quality development of inclusive finance, promote financial institutions to do a good job in inclusive finance, increase support for the weak links of the real economy, stimulate the vitality of micro entities, and promote the economy to accelerate the stabilization and improvement.

"Compared with the previous inclusive small and micro loans, the "Notice" mentions a wider range of inclusive credit services, mainly including small and micro enterprises, agriculture-related business entities and key assistance groups, and further clarifies the key areas of inclusive financial support, and puts forward higher requirements for the service supply and supervision of financial institutions. Zhou Maohua further said.

It is very important to strike a good balance between "volume, price and risk".

The reporter learned that as an important part of the mainland's financial system, rural small and medium-sized financial institutions shoulder the triple goals of inclusiveness, profitability and security, and are an important battlefield for the mainland's financial development and reform, as well as an important factor affecting financial risks and financial stability.

The "Notice" clarifies the overall goal of inclusive credit in 2024, that is, to ensure quantity, stabilize prices, and optimize structure. The first is to ensure the quantity, that is, to maintain the support of inclusive credit, and put forward the growth target of loans for small and micro enterprises, agriculture-related entities, and poverty alleviation areas in different fields. The second is to stabilize prices, that is, to stabilize the prices of credit services, guide banks to strengthen the management of loan pricing, reasonably determine the interest rate level of inclusive small and micro enterprise loans and agriculture-related loans, and promote the steady and moderate reduction of comprehensive financing costs. The third is to optimize the structure, that is, to optimize the credit structure. Strengthen the service capacity of small and micro enterprise legal persons, increase the provision of first loans and renewal loans, actively develop small credit loan products, and promote the revolving loan model of borrowing and repaying at any time.

In Ye Yindan's view, rural small and medium-sized financial institutions need to do a good job in balancing "quantity, price, and risk" in the following four points.

First, focus on credit transformation and strive to tap high-value customers. Rural small and medium-sized financial institutions should give full play to their advantages in being close to the "three rural" markets, and deepen and penetrate the offline customers that are not easy for other banks to expand, such as individual industrial and commercial households. At the same time, considering that young customers are more inclined to the convenience of online loan products and are relatively insensitive to price, small and medium-sized financial institutions should use big data to segment, benchmark the convenience of various online financial products, develop online loan products, and continuously attract new value customer groups.

Second, coordinate the scale of deposits and cost control. On the liability side, it is necessary to abandon the scale complex, link up with the asset side, take the initiative to adjust the structure of liabilities with interest rates higher than those of interbank investment, break the preference for long-term time deposits with longer and more stable tenors, and do a good job in the structural matching of time deposits, reduce costs and maintain liquidity.

Third, refined management pays more attention to safety and efficiency. Fine management and risk prevention and control capabilities are the two wings to ensure safe development, active and refined management is fundamental, management in place will help reduce risks, and it is necessary to effectively implement and improve the long-term mechanism of "dare not, cannot, and unwilling" three non-in-one.

Fourth, the ultimate service to build a brand and improve the core competitiveness. The strength of small and medium-sized financial institutions in rural areas is not reflected in the scale of deposits and loans, but in the reputation of the people and the good value brand. Under the superposition and interweaving of factors such as institutional sinking, narrowing of interest rate spreads, and product convergence, the pursuit of ultimate service is an inevitable choice for small and medium-sized financial institutions to build their core competitiveness. Small and medium-sized financial institutions should achieve the ultimate in service and integrate service into the daily life of the people, so as to achieve overtaking in the corner and steady and far-reaching in the retail transformation.

Small and medium-sized financial institutions in rural areas should grasp the principle of regulating inclusive credit

The "Circular" proposes that banking financial institutions should refine the standards and procedures for the due diligence and exemption of different positions and different loan products in the inclusive credit line to improve operability.

In Zhou Maohua's view, financial institutions should optimize service methods according to the characteristics of the industry, strengthen the analysis and application of business flow and transaction data, and improve risk identification and control capabilities. On the one hand, we should implement the system of exemption from liability for due diligence, relieve the worries of due diligence personnel, and strive to achieve "exemption from liability". On the other hand, according to the actual situation of regional and rural small and medium-sized financial institutions, the regulatory evaluation and differentiated risk asset weight measurement should be optimized.

It should be noted that under the new development pattern, the transformation of rural small and medium-sized financial institutions into light banks is the need of the times and the key to development, and it is necessary to firmly establish a new development concept, grasp the top-level design, make overall plans for the transformation of light banks, explore new models, new mechanisms and new measures, and promote the transformation of traditional rural small and medium-sized banks into light banks with light capital consumption, new management models and high operating efficiency.

In Ye Yindan's view, small and medium-sized financial institutions in rural areas should adhere to the principle of "downward, small, and credit", and form a matrix of characteristic products and specialized services for customer groups that are different from other banks. Through "microcredit loans, credit cards, mortgage loans, salary issuance, social security cards" and other grasps, firmly grasp the young customer group. At the same time, we will give full play to the natural advantages of offline visits and wide coverage of outlets, transform from making products to customers, and continuously strengthen marketing reach. When customers have financial needs, they can think of rural financial institutions as soon as possible.

"Rural small and medium-sized financial institutions should always adhere to bottom-line thinking, improve risk governance capabilities, empower high-quality development with the help of financial technology, and do a good job in closed-loop management, fine management and compliance management. Ye Yindan further said.