Regarding small and medium-sized banks, Wang Tianyu, a deputy to the National People's Congress, suggested: reduce taxes and fees, replenish capital through multiple channels, and speed up bad disposal

On March 5, the 21st Century Business Herald reporter learned that Wang Tianyu, a deputy to the National People's Congress and chairman of the Bank of Zhengzhou, brought a number of suggestions on further reducing taxes and fees for small and medium-sized banks, supporting small and medium-sized banks to replenish capital through multiple channels, and accelerating the disposal of non-performing assets of small and medium-sized banks.

<h4>Further reduce taxes and fees for small and medium-sized banks</h4>

Wang Tianyu said that as a local financial institution, small and medium-sized banks continue to enhance their ability to serve the real economy, effectively alleviate the financing problems of small and micro enterprises, and help realize the national "six stability" and "six guarantees" policies. At present, the operation of small and micro enterprises is facing greater difficulties, and the risks are constantly exposed. Small and medium-sized banks are the main force serving small and micro enterprises, development has been significantly affected, profitability has declined, capital replenishment pressure is greater, the scale of non-performing assets has risen significantly, and business development is facing some difficulties.

Wang Tianyu believes that while small and medium-sized banks vigorously reduce fees and profits for small and micro enterprises, the relevant departments should be able to reduce their tax and fee levels, give full play to their support for small and micro genes and advantages, and promote them to better serve economic and social development.

To this end, Wang Tianyu put forward the following suggestions:

1. Continuation of Cai Shui (2018) No. 91 Document exempts small enterprises, micro enterprises and individual industrial and commercial households from VAT. The proposed implementation period will be extended from December 31, 2020 to December 31, 2023.

2. Continuation of the stamp duty exemption policy for loan contracts signed between financial institutions and small enterprises and micro enterprises in circular No. 77 of Cai Shui (2017). The proposed implementation period will be extended from December 31, 2020 to December 31, 2023.

3. Continue to implement the annual one-time bonus of Cai Shui (2018) No. 164 document and not be incorporated into the preferential policy of comprehensive income tax collection. It is recommended that relevant departments fully consider the practice of issuing enterprise year-end awards and employees' expectations for year-end awards, and extend the year-end bonus policy in Cai Shui [2018] No. 164 from December 31, 2021 to December 31, 2024, so as to better encourage employees to actively participate in the development of enterprises and create greater economic value.

4. Phased reduction or reduction of deposit insurance rates for small and medium-sized banks. The People's Bank of China implements differentiated deposit insurance rates for commercial banks, which are divided into eight grades, and the rates range from 2-16 per 10,000. Affected by their customer base structure and operation and management level, small and medium-sized banks have a low rating rating, so the deposit insurance rate is also higher, which has become an important cost expenditure for them. In order to improve the ability of small and medium-sized banks to serve the local real economy, considering the actual rates of small and medium-sized banks, it is recommended to reduce or reduce the rate standards of small and medium-sized banks in stages, and the deposit insurance rates are dynamically adjusted according to the operating conditions of each bank.

<h4>Support small and medium-sized banks to replenish capital through multiple channels</h4>

Since 2019, the Financial Stability and Development Committee of the State Council has pointed out in many meetings that it is necessary to supplement the capital of small and medium-sized banks through multiple channels and promote them to improve their ability to provide credit to small and medium-sized enterprises. The 2020 government work report also emphasizes that it is necessary to promote small and medium-sized banks to supplement capital and improve governance to better serve small and medium-sized enterprises. The financial regulatory authorities continue to explore the innovation of capital instruments, and in recent years, they have successively launched perpetual bonds and promoted local government special bonds to supplement the capital of small and medium-sized banks.

Wang Tianyu believes that the channels for capital replenishment of small and medium-sized banks have been broadened, and the pressure of capital replenishment has been alleviated to a certain extent. However, the long-term mechanism for capital replenishment of small and medium-sized banks has not yet been fully established, the new institutional arrangements are not perfect, and they are still limited by many factors, and the problem of capital replenishment has not been fundamentally solved.

In order to promote the sustained and healthy development of small and medium-sized banks and further enhance their ability to serve the real economy, Wang Tianyu hereby puts forward the following suggestions on the capital replenishment of small and medium-sized banks:

1. Promote the differentiated supervision of the issuance of capital supplementary instruments by small and medium-sized banks. First, it is recommended to comprehensively consider indicators such as asset scale and profitability, and further refine the classification of small and medium-sized banks. The second is to suggest that for the same capital supplementary tool, different issuance standards and approval requirements should be set for small and medium-sized banks in different categories, and more specific and more applicable operating rules for small and medium-sized banks should be introduced.

2. Further optimize the capital replenishment tools of small and medium-sized banks. Specifically, there are mainly the following aspects:

First, it is recommended to give further liquidity support to small and medium-sized banks in issuing perpetual bonds. For example, the conditions for eligible entities of perpetual bonds that can be operated on CBS will be further relaxed, so that most small and medium-sized banks can meet the access conditions.

Second, it is suggested that under the premise of controllable risks, the restriction on the proportion of self-operated capital supplementary bonds of small and medium-sized banks should be appropriately increased, the investment entities and investment scale of capital supplementary bonds of small and medium-sized banks should be expanded, and the conditions for non-bank financial institutions such as fund management companies to invest in capital supplementary bonds of small and medium-sized banks should be relaxed.

The third is to improve the market arrangements for small and medium-sized banks to issue convertible bonds. It is recommended that the Banking Credit Asset Circulation Center be used as a national centralized trading platform for convertible bonds and equity after equity conversion of unlisted banks to enhance the activity of convertible bonds and equity transactions of small and medium-sized banks; it is recommended to introduce independent and authoritative valuation institutions in the determination of the conversion price and equity transaction price of small and medium-sized banks, so as to provide a fair value reference under the unified valuation framework for the equity of unlisted banks, and improve the effectiveness of convertible bond transactions and equity transactions of small and medium-sized banks.

The fourth is to recommend supporting small and medium-sized banks to reduce risk-weighted assets through asset securitization. Asset securitization can realize illiquid assets in advance, alleviate liquidity risks, improve the efficiency of financial markets, and it is recommended to support small and medium-sized banks to explore the securitization of non-performing assets and reduce the denominator of their capital adequacy ratios, thereby improving capital adequacy ratios.

3. Improve the mechanism for replenishing local bonds and further increase the scale of issuance. Last year, a total of 200 billion yuan of local bonds were issued across the country to supplement bank capital. It is hoped that the scale of local bond issuance will be expanded this year, the capital problem of small and medium-sized banks will be solved, and small and medium-sized banks will be helped to quickly resolve the risk burden. At the same time, it is necessary to balance the allocation of local bond issuance scale, and it is not recommended to only supplement rural commercial banks with higher risks, and urban commercial banks that have the ability to support private, small and micro enterprises and have controllable risks should also give a certain amount of support. First, strengthen access guidance. The second is to broaden the way of supplementation. The third is to improve the exit mechanism.

<h4>Accelerate the disposal of non-performing assets of small and medium-sized banks</h4>

In recent years, the downward pressure on China's economy has increased, superimposed on the impact of the global new crown pneumonia epidemic, corporate risks have been continuously exposed, bond market defaults have occurred frequently, the debt problem of urban investment platforms has been prominent, and the asset quality of commercial banks has faced greater pressure. As an important part of China's financial system, small and medium-sized banks are also a key link in preventing and resolving systemic financial risks; continuing to do a good job in the disposal of non-performing assets and exploring channels for the disposal of non-performing assets is particularly critical to the healthy development of small and medium-sized banks. At present, the disposal of non-performing assets of small and medium-sized banks is facing many constraints.

In order to better promote the disposal of non-performing assets of small and medium-sized banks, Wang Tianyu put forward the following suggestions:

1. Broaden the channels for the disposal of non-performing assets. The first is to relax the market-oriented access standards for the disposal of non-performing assets. The second is to promote the development of non-performing asset securitization. The third is to further revise and improve the "Pilot Implementation Plan for the Transfer of Non-Performing Loans of Banks". It is recommended that the pilot banks for the transfer of non-performing loans be extended to small and medium-sized banks to alleviate the pressure on their disposal of non-performing loans and accelerate the realization of asset values; it is recommended to allow the transfer of personal loans such as personal housing mortgage loans, personal consumption collateral loans, personal operating mortgage loans, and automobile consumption loans in batches to improve the efficiency of disposal of non-performing loans. The fourth is to give small and medium-sized banks autonomy in the disposal of non-performing assets. For non-large credit card failures, it is recommended that the regulatory authorities allow small and medium-sized banks to write off in batches without reporting for approval.

2. Improve the efficiency of judicial proceedings for the disposal of non-performing assets. The first is to accelerate the reform of the financial legal system. It is recommended to introduce relevant legal provisions and judicial interpretations on the trial and enforcement of financial cases, improve enforcement standards, simplify litigation procedures, shorten the trial and enforcement cycle of cases, improve the effect of disposal of non-performing loans, and provide a good judicial environment for resolving financial risks. The second is to build a long-term liaison mechanism between the courts and small and medium-sized banks. The third is to establish a special handling mechanism for financial cases. The fourth is to create a deterrent mechanism for enforcement by persons subject to enforcement.

3. Build a trading platform for non-performing assets. It is recommended that the regulatory authorities or industry associations take the lead in building a national unified standard platform for the disposal of non-performing assets, and build it into a comprehensive platform for the disposal of non-performing assets, information release, and transaction matching, so as to turn non-performing assets into treasures; improve the transparency of the underlying assets and the standardization of disclosed information, ensure the transparency and reliability of platform transactions, and improve the transaction efficiency of non-performing assets.

4. Increase fiscal and taxation policy support. First, the value-added tax on mortgage assets involved in litigation against small and medium-sized banks and taxes such as surcharges, deed taxes, land value-added tax, and stamp duty shall be paid by the taxpayer in accordance with law. Small and medium-sized banks may accept the entrustment of taxpayers to handle tax declarations, tax payments and other matters in accordance with the law. The second is to simplify the pre-tax deduction declaration procedure for loan losses of small and medium-sized banks, declare asset losses to the tax authorities, only need to fill in the appendix to the annual tax return of enterprise income tax, and no longer submit information related to asset losses. The third is to give a certain proportion of financial subsidies to the new non-performing loans of private and small and micro enterprises added by small and medium-sized banks, which are specifically used to resolve the non-performing assets of private, small and micro enterprises.

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