How can rural financial risk prevention hold the bottom line?

Recently, illegal fundraising and P2P bosses absconding with funds have been reported by the media from time to time. The spirit of the Central Economic Work Conference made clear that financial service innovation and financial risk prevention must hold the "bottom line" of safety. In recent years, as rural financial workers, what we have felt particularly strongly is that whether it is private lending or illegal fundraising, the people who ultimately suffer losses are the masses, and the investors who ultimately gain benefits in rural areas are few. The reason for this, to a very important extent, lies in the fact that whether it is private financing activity or newly established rural financial organizations, some people engage in illegal business activities under the guise of lawful operation, and the financing interest rates are far higher than those of banks that organize funds according to statutory interest rate standards, correspondingly pushing up the financing costs of refinancers, and in the end increasing the usage costs of the final users of the funds, causing product prices to rise, disrupting financial order, and being unfavorable to price stability and to the development of the causes of agriculture, rural areas, and farmers.

Rural areas are a special financial market. Many investors only focus on the rate of return promised by the investment target, while ignoring the safety of the principal. On the one hand, some rural financial organizations established in haste lack experience and have weak management capacity, arbitrarily set interest rate prices without regard to cost, have high costs of organizing funds, and therefore sell financial products at high prices. Managers did not pay attention to disorderly operations, which led to financial risks. Illegal fundraisers have impure motives from the very beginning, planting the seeds of high risk in private investment behavior. On the other hand, farmer clients have poor awareness of protecting their rights in investment and weak risk awareness. The amount of idle surplus funds that farmers invest is mostly below 50,000 yuan, the amount is small, overly dispersed, and in addition their prevention capacity is poor. During rural surveys, the sentence heard most often was: "Many people are putting money with him (the illegal financier), the interest rate is 10 times higher than the bank, and even if there is a loss it is not just me, this 10,000 yuan of mine is nothing, there are plenty of people with more than me." There is a mentality of "if the sky falls, it smashes everyone." This mentality is the root cause of farmers making mistakes in investment direction and being cheated.

Preventing risk and holding the bottom line is not something that can be solved by any single side alone; it requires the joint efforts of the government, financial regulatory authorities, banks, and the masses. First, the government and financial regulatory authorities must carry out publicity services and legal restraints in place. While local governments assume responsibility for implementing policies for financial system reform and innovation, they should work with regulatory authorities to do a good job in publicity for farmers and the masses on investment risk prevention, and, according to corresponding laws and regulations, follow the method by which rural areas formulate village rules and conventions to formulate a series of measures to prevent financial risk, using laws and regulations to restrain nonstandard behavior in the rural financial market. Regulatory authorities should draw on the strength of rural financial institutions spread across urban and rural areas, and through media reports, distributing leaflets, going through villages and alleys, establishing WeChat groups, and QQ groups, combine them with factual cases of illegal fundraisers absconding to educate them and do a good job in risk prevention publicity, so that investors correctly recognize that behind high investment returns lurks great investment risk.

Second, banks must uphold the concept of good faith. While assisting regulatory authorities in cracking down on illegal fundraising and standardizing the rural financial market, banks must increase their own operations and management. In interest rate pricing, they must closely revolve around the spirit of superior documents, and according to market pricing mechanisms, set reasonable, lawful financial consumption prices that conform to financial consumption standards. They must not, under the condition of an established interest rate, invent pretexts to add so-called deposit bonus fees, in-kind rewards, and other behaviors that increase the cost of organizing funds. In lending, under the condition of implementing a prescribed interest rate or a negotiated interest rate, they must not charge in the name of so-called loan insurance, so-called risk deposits, and the like to covertly raise the borrower's financing cost, except where the borrower agrees and it is negotiated. An inconspicuous additional condition will lower the bank's credibility, and external influence will lump a lawful, compliantly operating bank together with other unlawful departments that intercept deposits and extend loans at high interest.

Third, farmers' investment must be rational and prudent, and they must protect their rights according to law. To ensure investment safety, farmer clients should, when choosing investments, choose ones that have a Business License issued by the industrial and commercial management department and a Financial Business Operation License issued by the People's Bank, and had best go to regular financial institutions with strong capital strength and relatively high credibility to handle deposit (investment) business. Even if participating in private lending behavior without any business qualifications, the investment amount should not be too large, they should understand the true purpose for which the financier uses the financing, and must not mistakenly enter the strange circle of illegal fundraising and cause economic losses. In participating in financing activities of non-legal-person financial institutions, the funding transfer vouchers of both parties should be standardized, the obligations and responsibilities of both the borrower and the investor should be made clear, the rate of return and related matters should be stated, and the lawful rights and interests of investors should be ensured to be protected by law.