Beijing (CNS) -- Small-loan companies, the main body of civil loan business in China, are expanding rapidly, both in terms of number and business scale.
The latest statistics released by the People's Bank of China on July 19 shows that by June this year, the number of domestic small-loan companies reached 3,366, almost 30% more than half a year ago. At the same time, the amount of loans also climbed steeply to 287.5 billion yuan (about $44.5 billion), an increase of almost 90 billion yuan ($13.9 billion) compared to that of six months ago.
In order to lower the loan barriers for mid- and small-sized companies, small-loan companies came into being in 2008. Later they developed into the main body of civil loan business. This year has seen a historical peak in financial institutions' continually growing deposit reserve ratio, and thus, companies are experiencing more difficulties turning to the banks. As an alternative, small-loan companies have boomed.
So far, 13 provinces and autonomous regions have over 400 small-loan companies on record and 342 companies were registered in Inner Mongolia alone.
On the other side of the coin, domestic small-loan companies are coming to a bottleneck of capital reserves. According to some experts, the inability to absorb savings and the restriction of registered capital under 200 million yuan (about $30.9 million) are the root causes of the slow-down. Some small-loan companies have already run out of capital reserves. Some have raised the loan threshold because of the resource shortages, which in fact makes it no longer a "small loan." Support from the authorities is expected to ease the temporary stresses of small-loan companies.
