Themed “Inclusive Finance under the Background of Innovation”, the 2nd Think Tank Lecture of Shanghai Academy was held at China Financial Information Center on May 5. Wen Xueguo, Executive Vice President of Shanghai Academy, chaired and addressed the meeting. Jiao Jinpu, President of Shanghai Gold Exchange, and Chen Kuiming, Deputy Secretary of the Party Committee and Director of Hainan Rural Credit Cooperatives Union, both made keynote speeches, respectively titled “Advanced Principles and Outlook of Digital Inclusive Finance”, and “Practice of Hainan Rural Credit Cooperatives in Inclusive Finance”.
In his speech, Wen Xueguo said, Chinese Premier Li Keqiang chaired an executive meeting of the State Council on May 3, which called for the setting up of inclusive finance departments in large and middle-sized commercial banks in 2017, along with improvements of services targeted at micro and small-sized enterprises, as well as agriculture, rural areas, and farmers. Inclusive finance focuses on providing effective financial services to disadvantaged groups, such as micro and small-sized enterprises, farmers, and low-income urban groups, so as to eliminate poverty and realize social equity. His keynote speech was aimed to analyze ways to introduce inclusive finance in the real economy by combining theories with practice.
In his speech, Jiao Jinpu said, digital inclusive finance has changed our life. To better develop digital inclusive finance, eight advanced principles need to be drafted. 1) Advancing development of inclusive finance with digital technologies; 2) Balancing the innovation and risks in digital inclusive finance; 3) Establishing a proper legal and regulatory framework for digital inclusive finance; 4) Expanding the ecological system of infrastructures for digital financial services; 5) Adopting responsible digital financial measures to protect consumers; 6) Highlighting the popularization of digital technological knowledge and financial knowledge among consumers; 7) Promoting identity verification among the customers of digital financial services; 8) Monitoring the progress of digital inclusive finance.
As for the digital approaches to realize inclusive finance, he considers that the first step is to develop feasible national strategies and action plans and take actions at the State-level based on national situations; As the second step, taking the advanced principles for reference, each country can build a complete policy system of digital inclusive finance, strengthen financial infrastructure construction, and reasonably balance the innovation and risks involved in inclusive finance and effectively protect the legitimate rights and interests of financial consumers through proper and effective regulation. The financial industry can further develop detailed technical standards to promote the internationalization and standardization of financial technological products, as well as the maturity of Internet finance. As the third step, efforts shall be made to strengthen the role of digital inclusive finance in lowering financial service cost, expanding the scope of financial services and solving the “last kilometer” problem of financial service, so as to deliver proper and effective financial services to micro and small-sized enterprises, farmers and low-income urban groups.
Chen Kuiming introduced the Hainan Province practice in providing small loans to rural households. He considers that rural households are among the key targets of inclusive finance. The approach to provide small loans to rural households is of reference significance to other targets of service. But that involves many problems at present, such as complex procedures, long cycles and unequal opportunities. That’s actually related to the issues about equal opportunities and sustainable development. To realize equal opportunities, the path of financial democracy must be taken to place farmers and financial institutions in equal positions. Hainan has developed the loan mechanism characterized by “four withs and four withouts”. “Four withs” refer to having the willingness of achieving prosperity through hard work, having proper working ability, having fixed residences and having legitimate purposes of loans. Application for loans by the “four withs” rural households cannot be rejected. “Four withouts” refer to having no gambling habits, having no drug addiction, having no records about malicious default on loans, and having no records about serious intentional crimes. Financial institutions can only reject the application by rural households that fail to meet the “four withouts” conditions. The measures effectively solve the problem about opportunity inequality involved in inclusive finance, increase the coverage and availability of inclusive finance, and improve farmers’ satisfaction. To remove the obstacles hindering sustainable development, issues about risk control and scientific pricing must be addressed. First, efforts must be made to implement financial education among rural households, establish the honesty incentive system, and put in place a series of systems about honesty targeted at credit workers. Second, he thinks an interest rate of 10% is relatively scientific to make financial institutions maintain meager profits and secure the endogenous power driving their operation.
In the Q & A session, experts gave vivid and detailed explanation about the issues, such as “how financial institutions shall apply the block chain distributed technology to management”, the “commercial operation model of financial institutions”, the “electronic contract signing model”, the “progress of digital inclusive finance in institutions” and the “choice of identity verification in inclusive finance”, and won round audience applause.
Attendees at the think tank lecture included more than 400 experts and scholars from all walks of life.
(Article and photographs by Xiang Jinmei)
