The Asian Development Bank (ADB), through its Poverty Reduction
Cooperation Fund from the British Government, is supporting the
establishment of micro-credit institutions in China.
ADB will help develop relevant micro-credit systems and
regulatory guidelines, as well as a tendering mechanism to attract
foreign and local investment, for two pilot sites - Jiangkou County
of
Guizhou Province, southwest China, and Dongsheng District of
Erdos City of
Inner Mongolia Autonomous Region, north China, the bank said in
a statement.
The bidding processing kicked off on March 13, 2006.
China's first experiments on micro-finance practice began in the
mid-1990s, over the past 10 years, micro-finance institutions had
developed slowly and failed to cast any significant impact on the
large market or micro-finance products in the country, said the
bank.
Ying Qian, an ADB expert, said the lack of human resources,
capital, and knowledge has been blamed for the slow development of
micro-credit in China.
"The key constraint, however, is the inadequacy of the legal and
regulatory environment for micro-finance," he said.
The Chinese Government and financial regulatory institutions are
now carrying out a new attempt to introduce a competition mechanism
into the rural financial sector by establishing a financial
permission system for credit-only micro-finance institutions to
operate. In the absence of a uniform policy for micro-finance
legislation and regulation under which the private sector can apply
for a micro-finance permission to operate anywhere in China, said
the bank. China has proposed five pilot provinces in which they
wish to allow private micro-credit institutions (MCIs).
"The development of clear and consistent national legislation
and regulatory procedures and structures is critical to the
establishment of a vibrant private sector concerning micro-finance
industry," said Ying.
(Xinhua News Agency March 17, 2006)