Rural Financial Autonomy Solves Farmers' Loan Difficulties
In recent years, a new experiment called “rural financial autonomy” has gradually been introduced into many villages in Zhejiang, Guizhou and other places, helping to realize basic financial services “in every village.”
The “village two committees” bridge the gap and solve the “five difficulties”
Shangcai Village, Ganlin Town, Shengzhou City, Zhejiang Province, is a small mountain village surrounded by mountains, where villagers make a living by growing fruit trees, nursery stock and livestock. Li Xiangyang, a 36-year-old villager, has always harbored a “green farm dream”: more than 10 mu of land, with flowers and trees forming a forest, and some chickens and ducks could also be penned in the woods. However, due to insufficient start-up capital, his own flower and tree base was only 3 mu, and the varieties were single. “The scale cannot grow, and sales are also a problem.” Li Xiangyang also thought about taking out a loan, but he did not know how to handle bank loan procedures, and he had no collateral, so he gave up the idea.
“Li Xiangyang's experience reflects the contradiction between farmers' needs and the current state of rural finance.” Feng Jianlong, president of Agricultural Bank of China Zhejiang Branch, told reporters that on the one hand, farmers have a large number of financial needs that cannot be met, and on the other hand, banks developing rural finance also face the “five difficulties,” namely “it is difficult to select eligible farming households, difficult to set loan amounts, difficult to manage loan purposes, difficult to reduce management costs, and difficult to control bank risks.”
In exploring services for “agriculture, rural areas and farmers,” Agricultural Bank of China Zhejiang Branch found that the “village two committees” (the village Party branch committee and the villagers' committee) are best suited to become the bridge between farmers and banks, because the “village two committees” best understand the villagers' character and credit, are best able to grasp rural property rights information, most hope villagers will become prosperous, are best able to promptly identify farming household loan risks, and are best able to assist banks in resolving farming household loan risks.
“Using the ‘village two committees’ as a link is precisely the best point of focus for solving the ‘five difficulties’ in farming household loans.” Feng Jianlong introduced that starting in the second half of last year, Agricultural Bank of China Zhejiang Branch took the lead in carrying out pilot trials of the rural financial autonomy model. As long as a borrower finds 5 villagers for mutual guarantee, and then the “village two committees” review and publicly announce it, and Agricultural Bank of China approves it upon review, a small loan of up to 300,000 yuan can be obtained. After learning this news, Li Xiangyang could not sit still. In November last year, he submitted an application to the village, and unexpectedly the loan came through that same month. Li Xiangyang used this money to expand his production scale and realize his “green farm dream.”
The “village two committees” play an important role in rural finance. Recently, the China Banking Regulatory Commission issued the Guiding Opinions on Promoting Basic Financial Services “in Every Village,” which clearly proposed that banking financial institutions should strengthen the construction of village-level basic financial service environments, continuously promote the construction of village-level credit culture, carry out credit rating assessments for farming households, give play to the “village two committees” advantages in personal connections and local ties, absorb farming households into participation, and enhance the transparency and fairness of credit assessments. Cultivate farmers' credit awareness and consolidate the credit foundation and service environment for financial services in administrative villages.
Both Benefits and Risk Control
Through “rural financial autonomy,” farmers, the largest service group of inclusive finance, have obtained convenient and affordable basic financial services.
But if banks delegate power downward, will this lead to risks and bad debts?
It is understood that in order to manage loan risks well, “rural financial autonomy” has also established a “six-self” loan handling mechanism. The so-called “six-self” means “customer self-recommendation,” in which farming households submit loan needs to the “village two committees,” and after the “village two committees” openly screen out honest farming households, they recommend them to Agricultural Bank of China; “guarantee self-organization,” in which farming households provide guarantors recognized by the “village two committees”; “independent borrowing,” in which after the loan is reviewed and signed by Agricultural Bank of China, farming households can obtain the loan at any time within the amount and term through channels such as “Huinongtong,” with interest calculated according to the actual number of days used; “self-disciplined use of funds,” in which villagers conduct self-management, self-restraint and self-supervision over loans to ensure the loans are used for lawful production and business operations and living consumption; “self-service,” in which farmers can handle borrowing, repayment, remittances, bill payments and other business through “Huinongtong” machines installed in the village without leaving the village; “self-encouragement for keeping trust,” in which the priority credit limits, interest rate discount ranges and other policies provided by Agricultural Bank of China for each village and each farming household are directly linked to their respective financial autonomy conditions; the better the autonomy conditions, the more benefits obtained.
“‘Rural financial autonomy’ not only enables honest, trustworthy, hardworking and capable villagers to obtain financial services, but also raises the level of rural credit construction.” Feng Jianlong said.
Taotou Village, Liu'ao Town, Sanmen County, is also a pilot village for Agricultural Bank of China's financial autonomy. The village is surrounded by the sea on three sides and has formed a fairly complete seawater aquaculture industry chain——pond farming, trafficking and sales, and feed sales. Village committee director Lin Xiaokuai introduced that under the “rural financial autonomy” model, more than 26.1 million yuan of loans in the village had not yet matured, and many villagers could hardly wait to raise money and prepare to repay their loans. “Someone once borrowed 150,000 yuan from Agricultural Bank of China, and when it matured he might not be able to repay it. The neighbors learned of this. Before the bank even pressed for repayment, every household in the village began to pay attention, and if necessary they would help him advance the money so it could be repaid.” Lin Xiaokuai said that this is because the villagers all understand that one household's credit will affect the whole village's credit, and further affect their own loan amount and interest rate.
“Farmers are very trustworthy, and once credit risk occurs, the village collective is also the easiest to intervene.” Sun Weiping, Party branch secretary of Shenyang Village, Dongkeng Town, Jingning County, said that so far, none of the loans issued in their village within 3 years has been overdue. If risk occurs, farmers' bamboo forests, tea gardens and other assets are easily disposed of and converted into cash within the village, so the risk to the bank is very small.
Data show that as of the end of June this year, the administrative villages where Agricultural Bank of China Zhejiang Branch carried out “rural financial autonomy” pilot trials had expanded from 1 at the beginning to 193, with a loan balance of 546 million yuan, benefiting 4,594 farming households, and issuing 3,188 farming household loans, with not a single one overdue.