The concept of lending small, unsecured amounts of money to the
poor could be applied in China said a Nobel Peace Prize Laureate,
who pioneered the idea, in Beijing on Sunday.??
Muhammad Yunus, who came to China only nine days after he was
awarded this year's Nobel Peace Prize and is founder of the Grameen
Bank, said the business model called "microcredit" or
"microfinance" could be developed quickly in China with government
assistance.?
Attired in traditional Bangladeshi dress the 66-year-old Yunus,
who has offered small loans to millions of poor Bangladeshis in the
past 30 years to help them become self-employed, said his model
could benefit Chinese people.?
"It's not charity," Yunus said in Beijing at the Grameen
International Conference on Microcredit in China. "It's a business
that can earn money and also lift the poor out of penury."
In China conventional banks have no interest in household credit
in rural areas because of high repayment risks and operational
costs. Thus, rural productivity has been hampered by a lack of
access to reliable and affordable credit for investment and to
allow people to become involved in small "off-farm"
income-generating activities.
Some pioneering institutions, mainly domestic or overseas
non-government organizations, have experimented with microcredit in
China for 10 years.
But it's not sustainable because of policies, legal restrictions
and insufficient funding, said Du Xiaoshan, a pioneer of
microfinance research and practice in China and deputy director of
the Rural Development Institute affiliated to the Chinese Academy
of Social Sciences.
Seven private Chinese microcredit companies also face the same
problems as they're only permitted to provide loans but cannot
accept deposits.
Yunus said not allowing microcredit companies to take deposits
would greatly hinder their development and stressed the importance
of a proper legal environment and supervision mechanism for such
businesses. Currently there are no laws or regulations for this
field in China.?
Jiao Jinpu, deputy director of the research bureau of the
People's Bank of China, said the central Bank was working closely
with the China Banking Regulatory Commission, the Ministry of
Finance and the Ministry of Commerce to give microfinance providers
a clear legal environment to allow them to develop microcredit in
China.
Yunus suggested under the current circumstances establishing a
fund from which microcredit could be accessed could be a practical
way forward.?
(China Daily October 23, 2006)