How can the difficulty of obtaining loans in rural areas be solved? Improving the credit reporting system is key

The rural credit reporting system is an important part of the social credit system. The frequent “difficulty of obtaining loans” in China's rural areas is inseparable from the lagging development of the rural credit environment. To solve the rural “difficulty of obtaining loans” as quickly as possible, it is necessary to accelerate the development of the credit reporting system and gradually achieve the integration of credit between urban and rural areas.

According to media reports, as of the end of May 2015, a total of 18 counties (cities and districts) in Guangdong Province (excluding Shenzhen) had launched credit village development, with 15.07 million yuan invested, and information on more than one million rural households had been entered into the credit reporting center. According to the deployment of the Guangdong provincial government, relevant departments plan to use three to five years to achieve full regional coverage, full business coverage, and full population coverage of basic rural financial services. This marks that the framework of Guangdong's rural credit system is gradually becoming clear, placing it at the forefront of rural credit reporting system development nationwide.

Modern financial intermediation theory holds that information production is an important function of banks. As an important part of the social credit system, the rural credit reporting system is an important link in the financial ecological chain. Unlike in cities, carrying out credit business in rural areas must rely on a large amount of “soft information.” For a long time, the frequent “difficulty of obtaining loans” in China's rural areas has certainly been related to the high loan thresholds of banks, but it is also inseparable from insufficient information supply and the lagging development of the rural credit environment. Due to the lack of normal information channels, banks cannot promptly grasp farmers' credit data and usually refrain from lending in order to avoid credit risks. Therefore, improving the rural credit reporting system has far-reaching significance for solving the “chronic illness” of rural difficulty in obtaining loans and for improving the ecological environment of rural finance.

The state attaches great importance to the development of the credit system and has begun top-level design at the national level. As of the end of April 2015, the central bank's credit reporting system had included 860 million natural persons and 20.68 million enterprises and other organizations, with 360 million natural persons having credit records and 10.23 million enterprise organizations having loan cards. At the beginning of this year, the central bank issued the Notice on Making Preparations for Personal Credit Reporting Business, requiring eight institutions, including China Chengxin International Credit Rating Co., Ltd. and Zhima Credit, to make preparations for personal credit reporting business. However, currently only the central bank in China has established a credit reporting system, and the sources of collected information are mainly banks, far from achieving full coverage. Many citizens and organizations are still in a state of having no credit records. Especially in rural areas, because the foundation for credit reporting is relatively weak, collecting, organizing, approving and evaluating, and querying rural credit information is relatively difficult. Basic work involving rural credit reporting models, farmers' privacy protection, agriculture-related data security, sharing and exchange of credit information, and credit reporting products and services that suit rural realities is still very lacking. This has led to a series of problems, including lack of credit, an unsound mechanism for rewarding and punishing trustworthiness and untrustworthiness, and an obvious gap between urban and rural credit system development.

This shows that the credit reporting system still requires a very long period from top-level design to full implementation, and a great deal of basic work needs to be done. Especially in rural areas, to solve the rural “difficulty of obtaining loans” as quickly as possible and promote the sustainable development of rural finance, it is necessary to accelerate the development of the credit reporting system and gradually achieve the integration of credit between urban and rural areas. Therefore, in the period ahead, the development of the rural credit reporting system should strengthen work in the following aspects:

First, accelerate the development of a unified credit reporting platform. A unified credit reporting data platform should be developed as quickly as possible, supporting software system development for rural financial institutions should be strengthened, connections and information sharing in the credit reporting field should be enhanced, and a unified credit evaluation index system suitable for the whole country should be established, thereby forming a credit information network with convenient multi-channel credit collection, full coverage of citizens and organizations, and queryable information by category.

Second, increase the professional force engaged in credit reporting. Credit reporting entities should cover rural financial institutions such as Agricultural Bank of China, Agricultural Development Bank of China, rural commercial banks, rural credit cooperatives, and postal savings institutions, and efforts to carry out rural credit reporting activities should be increased. Advanced experience should be drawn on, credit reporting positions should be established, and the collection, investigation, organization, and preservation of original information should be strengthened in strict accordance with relevant regulations to establish and improve their own credit evaluation systems.

Third, link the credit reporting system with the credit reward and punishment system. Local governments should formulate some local credit reporting management regulations or specific measures suited to the particularities of the rural financial market. These regulations or measures should be linked to the credit reporting system in aspects such as administrative approval, government support, market access, and qualification recognition. For example, for untrustworthy farmers, once the “record of untrustworthiness” reaches a certain standard, they will not only be unable to enjoy the corresponding financial subsidies for planting and breeding, but will also have their qualifications to initiate the establishment of farmers' professional cooperatives and to set up family farms revoked. For trustworthy farmers, preferential conditions for credit funds can be obtained, including eligibility for loans, interest rate levels, and loan processing procedures, as a “benefit” for trustworthy farming households. Through such methods, farmers can truly begin to attach importance to the credit reporting system, accelerating its development.

Doing rural credit reporting work well requires the joint efforts of the government, the market, social organizations, and other parties. Through purposeful and conscious cultivation by all parties, farmers can form the habit of consciously and proactively providing credit information, thereby raising the overall social credit level in rural areas and laying a solid foundation for improving rural civilization and farmers' quality in the future.