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Private lending concern problems

as the excess of the amount of money in circulation in the market, the relatively crowded conditions on capital markets and investment, private capital is a good way out is also the responsibility of the Government. And private funds into the development of SMEs, through private financing into the corporate lending market, solutions for small and medium enterprises development fund, as well as more stable, legitimate investment channel of private capital looking for a very good export. Private lending as a useful complement to the formal, effectively improve the small and medium enterprises and "San Nong" funds availability, and status in the whole field of social financing more and more important. But due to the lack of effective legal protection and regulation of private lending constraint, also prone to risk.

(a) the lack of normative management risk-prone. Currently China existing legal regulations for civil borrowing legal and illegal of boundaries divided not is clear, to exists civil borrowing and illegal fund-raising awareness not clear, while no clear civil borrowing of regulatory sector, no established corresponding of risk prevention plans, for daily sex of risk monitoring, take prevention sex measures, more no effective of should means, just in funds chain fracture of enterprise and personal on to illegal fund-raising or fund-raising fraud crime punished, on those can debt coupon of enterprise is to normal financing activities treats. Lacks has most key of prior prevention civil lending interest rate shall not over earlier similar Bank loan interest rate of 4 times times, over this a boundaries of on belongs to usury of category, this led to voted financing both of interests are cannot get effective guarantees 2010 to 2012 1 quarter late, o city judicial trial field involved financial case total 15 up, which civil case 14 up, criminal case 1 up, involved amount amounted to 38.35 million Yuan. Du Jia XING is the most typical case of illegal fund-raising. Defendant Du Jiaxing as franchisee by Heilongjiang Jin Yuanbao technology development co, Ltd authorizes was incorporated on September 11, 2007 in Acheng district Harbin Cheng Jia XING culture of spirulina distribution Department, training sales rebate activities and advocacy. Pledge monthly rebate, a few months back, more investment in more profitable ways to trick people and signed a one-year contract of supply and demand. Through above way, accused Du Jiaxing since September 2007 to April 28, 2008 Jin Yuanzao company fund-raising fraud case incident, illegal absorption public funds total 1.46 million Yuan Yuan, involved o city residents 26 people, has returned paragraph 280,000 yuan, caused loss 1.18 million Yuan has failed to save, its to high returns high returns for bait illegal absorption public deposits amounts huge, disrupt has national of financial order, caused has more bad of social effect.

(b) the randomness of the operation led to many problems. Most of the folk debit and credit, legally binding and less able to guarantee, in the event of disputes, legal rights of borrowers and is difficult to be effectively protected. Procedures compared simple, some oral agreed, some only wrote has IOU, more is rare to notary sector notary, again no a specification of civil borrowing contract text format on civil borrowing of amount, and interest rate and reimbursement time and right, and responsibility, for clear provides, once appeared disputes, must left hidden, due to proof evidence insufficient, led to court not accepted or to just judgment activist, then may led to violence collection phenomenon occurred, serious effect social settled.

(c) the lack of effective guidance on the formation of Central Bank credit policy impact. Countries actively promoting economic restructuring, actively advocates maintain pressure in credit policies. Private lending due to the maximum interest, driven by massive capital flows to limit the development of industries to weaken the credit policy of the State macro-control effect. In Acheng district due to excess real estate, banks limit the dire circumstances of the loan, some developers turn to private lending.

(d) credit to participate in lending should not be overlooked. Some borrowers use "spreads" participating private lending profits couldn't be ignored. Because Bank loan rates are significantly lower than the borrowing rate, on behalf of the people to buy a House, car and get loans from banks, and then to lend at higher rates, and increasingly complex with private finance and Bank funds in staggered, as well as rising lending chain, if any break in the Middle, will endanger the security of credit.



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