Risk disposal must come first in paired credit for farmland
As one of the pilot counties nationwide for mortgaging rural land contractual management rights, Taierzhuang District of Zaozhuang City, Shandong Province, uses farmers' contracted land management rights as collateral and farmers' credit as support, leverages the advantages of villagers' close ties and the management advantages of village-level organizations, and has innovatively launched the "paired credit" loan product, which both activates farmers' dormant assets and solves the disposal problem of farmland mortgage loans. Please see our reporter's investigation.
"The village allotted my family a total of 8 mu of contracted land. In the past I only knew that you reap what you sow, and never thought I could use it as collateral for a loan to start a side business." On September 22, in Qianyuli Village, Malantun Town, Taierzhuang District, Zaozhuang City, Shandong Province, farmer Zhang Chengyu told the reporter. It turned out that on July 6, he used the management right of 8 mu of contracted land in his household to voluntarily pair up with Zhang Tianjun, a creditworthy household in the same village, and obtained a "paired credit" farmland mortgage loan of 60,000 yuan from the district rural commercial bank, opening a "farmhouse leisure" restaurant at the entrance of the village, and business was booming.
Zhang Chengyu was able to obtain the loan based on two basic conditions: first, using the management right of his contracted land as collateral; second, signing a land transfer agreement with a villager who had passed the rural commercial bank's credit evaluation, with that villager providing a guarantee for him; once Zhang Chengyu cannot repay the loan, the guaranteeing villager repays it for him and obtains the management right to the corresponding term of his contracted land.
This is the "paired credit" farmland mortgage loan product innovatively launched by the rural commercial bank of Taierzhuang District, which determines the risk disposal method before the loan is implemented. In March this year, driven by the district government's establishment of a risk compensation fund, the Taierzhuang District Sub-branch of the People's Bank of China guided the district rural commercial bank to use farmers' contracted land management rights as collateral and farmers' credit as support, leverage the advantages of villagers' close ties and the management advantages of village-level organizations, and innovatively launch this credit product, which both activates farmers' dormant assets and solves the disposal problem of farmland mortgage loans. As of the end of August, the district had issued "paired credit" mortgage loans totaling 3.67 million yuan to 69 farmers.
1 Letting farmers' credit provide effective support for farmland mortgages
At the current stage, the difficulty in advancing farmland mortgage loans lies in the difficulty of disposing of the collateral. Li Jingxin, deputy director of the Taierzhuang District Agriculture Bureau, introduced that the construction of the rural property rights transfer and trading market has just begun, and the rural property rights disposal system has not yet been established. Under these conditions, when issuing loans secured by contracted land management rights, once problems arise, the collateral is very difficult to dispose of and convert into cash quickly, which is also the main reason banks are unwilling to carry out such loans.
"A good social credit environment is the soil that breeds financial innovation, especially in rural acquaintance societies, where an honest and trustworthy farmer is familiar to fellow villagers and recognized by everyone, and has a strong driving effect." said Ren Xianwen, president of the People's Bank of China Taierzhuang District Sub-branch. "If innovative farmland mortgage loans can be effectively combined with the construction of the farmers' credit system, they will achieve twice the result with half the effort."
To steadily advance the pilot work, Taierzhuang first consolidated the credit foundation, carried out in depth the construction of Credit Taierzhuang, and built and improved the "one database and one system."
The "one database" is the "farmer information database" established in accordance with the "Pilot Work Plan for the Construction of 'Credit Taierzhuang'" issued by the Taierzhuang District Sub-branch of the People's Bank of China, using farmers' "two rights" as the main parameters. This database has established electronic credit files for 41,400 farming households in the district, accounting for 92.7% of the district's total farming households, covering about 2 million pieces of various information such as household members, land, housing, planting, breeding, operating income, production expenditure, credit demand, and credit records, and can provide comprehensive data reference for carrying out the pilot of "farmland" mortgage loans.
The "one system" is the "three-credit evaluation system" for creditworthy households, creditworthy villages, and creditworthy towns, established in accordance with the "Implementation Plan for the Evaluation Project of 'Creditworthy Households,' 'Creditworthy Villages,' and 'Creditworthy Towns' in Taierzhuang District" formulated by the Taierzhuang District Rural Commercial Bank. As of the end of July this year, 2 creditworthy towns, 16 creditworthy villages, and 2,200 creditworthy households had been evaluated in the district. At the same time, based on the developed "automatic farmer credit scoring system," farmer credit rating evaluations were carried out, with a total of 78 AAA-grade creditworthy farming households, 315 AA-grade creditworthy farming households, and 1,607 A-grade creditworthy farming households evaluated, providing strong credit support for carrying out "farmland" mortgage loan business.
2 "Credit guarantee + pre-transfer of land" clarifies the risk disposal method
Ren Xianwen introduced that in order to endow rural contracted land management rights with the function of mortgage financing and innovatively launch the "paired credit" farmland mortgage loan model, the Taierzhuang District Sub-branch of the People's Bank of China, together with the district agriculture bureau, forestry bureau, and rural commercial bank, on the basis of full investigation and demonstration, scientifically designed the processing flow of the "paired credit" model: villagers use the management right of their contracted land as collateral and submit a loan application to the rural commercial bank; mortgage evaluation is determined through consultation by the bank, the village committee, and representatives of the village's villagers based on the local market price of wheat yield per mu and the contract term, avoiding the subjectivity of third-party evaluation and reducing mortgage evaluation costs; after evaluation, coordinated and supervised by the village committee, the borrowing villager and another villager with a credit rating voluntarily pair up to sign a land transfer agreement and submit it to the town rural property rights exchange for filing and registration, agreeing that when the borrowing villager is unable to repay the loan principal and interest on schedule for various reasons, the paired villager will repay on his behalf; after the paired villager repays, the borrowing villager transfers the management right of his contracted land to the paired villager in accordance with the agreement until it is sufficient to offset the loan principal and interest or the borrower pays the loan principal and interest to the paired villager.
"The biggest feature of this model is that it clarifies the risk disposal method through 'pre-transfer first, then loan.' Moreover, it changes the past guarantee methods for farmer loans that required civil servant guarantees or multi-household joint guarantees, making it simpler and easier to implement, and better able to guide farmers to consciously establish a sense of integrity." said Ren Xianwen.
As the executing bank, Wang Baojun, president of the Taierzhuang District Rural Commercial Bank, introduced that the bank selected Qianyuli Village in Malantun Town, which has a relatively good credit foundation, to take the lead in piloting. During the pilot process, it fully leveraged the advantages of villagers' close ties and the grassroots management advantages of village-level organizations, and through the form of "farmer pairing and agreed transfer," realized the autonomous "pre-transfer" of rural contracted land among villagers, and gradually achieved the scientific design of the loan process, laying the foundation for promotion.
3 Risk compensation fund provides "reinsurance" for mortgage loans