Pilot program for mortgage loans on two rights still needs improved policies
Han Jun, deputy director of the Office of the Central Leading Group for Financial and Economic Affairs, said on the 27th that the pilot program for mortgage loans on rural contracted land management rights and farmers' housing property rights is an effective breakthrough in solving the difficulties farmers face in providing loan collateral and guarantees, but because of concerns about the difficulty of disposing of rural land, financial institutions still have many misgivings about carrying out this business, and the relevant pilot policies need further improvement.
Speaking on the 27th at the 2016 China Financial Annual Forum, Han Jun said that under current credit policy, whether collateral assets are sufficient is the main condition determining bank loans. A large number of rural small and micro enterprises, ordinary farming households and impoverished people have few collateral assets, so their loan needs are the hardest to satisfy, and this is a key focus for the country in advancing inclusive finance.
China has already made some important progress in broadening the range of collateral available to farmers and improving the rural guarantee system, including the launch of the pilot program for "two rights" mortgage loans. "At present, the outstanding balances of the two types of loans are each more than 13 billion yuan, but whether this reform can fundamentally change the difficulty farmers face in getting loans should probably not be viewed too optimistically," Han Jun said. Whether the pilot can be effective depends not only on the government's attitude and farmers' willingness, but also on whether financial institutions have enthusiasm for it.
He said inclusive finance is a weak link in China's financial system, and this year agricultural-related lending has shown weak growth momentum. Developing inclusive finance must reflect equality of opportunity, and at the same time inclusive finance cannot be turned into charitable finance; it must blaze a path of inclusive finance that balances fairness and commercial sustainability and truly benefits the broad masses of farming households, rural small and micro enterprises and impoverished people.