Officials of the CBRC Answered Questions from the Press on the Implementation Plan on Establishment of Financial Inclusion SBUs in Large and Medium-sized Commercial Banks


Recently, the CBRC issued the Implementation Plan on Establishment of Financial Inclusion SBUs in Large and Medium-sized Commercial Banks (the “Implementation Plan”) in order to promote large and medium-sized commercial banks to set up financial inclusion SBUs which focuse on financial service for micro- and small-sized enterprises (MSEs), agro-related areas, start-ups and poverty alleviation undertakings. Officials from the relevant department of the CBRC answered questions from the press.


I. What is the background for issuing the Implementation Plan?


The State Council attaches great importance to the development of financial inclusion. The third Plenary Session of the 18th CPC Central Committee explicitly proposed to develop inclusive finance. In 2015, the State Council issued the Development Plan for Promoting Financial Inclusion (2016-2020). In 2017, the Report on the Work of the Government points out that large and medium-sized commercial banks are encouraged to set up financial inclusion SBUs. Large banks should take the leading role, carry out differentiate assessment methods and support policies, and effectively alleviate the financing difficulties of MSEs.


In recent years, MSEs and agro-related loans continued to grow. As of the end of March 2017, the MSE loan balance nationwide was RMB 27.8 trillion, up by 14.4% year-on-year; the loans were extended to 13.63 million MSEs, an increase of 1.71 million. The balance of agro-related loans of banking institutions reached RMB 29.2 trillion, up by 8.9% year-on-year. The basic financial service coverage ratio of administrative villages was about 95%.


For the next step, the CBRC will guide financial institutions to further deepen the institutional reforms and improve the ability and efficiency of financial inclusion services, so as to further improve the coverage and accessibility of financial services and provide effective support for the real economy.


II. What are the highlights of the mechanisms of the financial inclusion SBUs?


The highlights of financial inclusion SBUs mainly are the line management system and five specialized mechanism.


Through establishing the line management system, banks aim to improve the efficiency and capacity of inclusive financial services. The Implementation Plan requires relevant banks to build top-down vertical management systems from head offices to branches, establish SBUs in head offices, set up specific departments in branches as well as specialized institutions, further delegate approval authority, in order to better serve target customers of financial inclusion.


Through setting up the five specialized operating mechanism, banks could further consolidate the development basis of financial inclusion business. The Implementation Plan requires relevant banks to set up specialized operating mechanisms for credit review, delegate approval authority, and establish specialized management systems under the principle of commercial sustainability. First is the specialized comprehensive service mechanism to expand the scope and depth of inclusive financial services, and develop diversified and all-round financial services. Second is the specialized statistical accounting mechanism to reflect the costs, revenues and risks of the financial inclusion SBUs. Third is the specialized risk management mechanism with asset impairment reserves in place to cover asset impairment risks. Reasonable risk tolerance of financial inclusion services should be set. Fourth is the specialized resource allocation mechanism which covers credit, economic capital, expenses, fixed assets, employment and other resources, so as to provide a strong resource guarantee for financial inclusion services. Fifth is a specialized evaluation mechanism. Banks should gradually set up a specialized performance appraisal system that fits the features of financial inclusion services, improve the differentiated evaluation indicator system and construct effective performance management and incentive-constraint mechanisms.


III. What are the supporting policies for the establishment of financial inclusion SBUs?


The CBRC and relevant ministries will strengthen support in differentiated supervision, monetary and credit policies, and fiscal and taxation support policies, in order to further incentivize banks to carry out inclusive financial services. The policies include: supporting banks to improve the service network; appropriately setting the NPL tolerance concerning loans extended to MSEs, agro-related areas, and poverty alleviation; making the fiscal guarantee system play a greater role in supporting the development of financial inclusion; improve measures such as tax incentives and risk compensation; and providing support in terms of reserves, refinancing and macro prudential assessment for inclusive financial services and eligible financial institutions. With collective efforts, the inclusive financial services will further promote employment, economic upgrading and improvement of people's livelihood.


IV: How to better carry out the Implementation Plan?


Specific requirements have been proposed to ensure effective implementation.


First, the implementation should be carried out step by step. The financial inclusion SBU reform should be a phased process and be gradually optimized on the basis of the existing structures of large and medium-sized banks. Pilot programmes could be carried out in certain areas and then expanded after gaining certain experience. Banks should gradually push forward the improvement of organizational structures, re-design of business procedures, optimization of information system and innovation of product services in phrases. Large banks will finish the establishment of financial inclusion SBUs in 2017.


Second, collaboration and cooperation is required. Each relevant party should closely cooperate, set up coordination mechanism and strengthen the guidance for relevant banks in establishing financial inclusion SBUs. Problems should be solved in a timely manner and relevant support policies should be established so as to further promote the development of financial inclusion SBUs.



Copyright: China Banking Regulatory Commission
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