Case Study
Micro-loans Secured by Time Deposits - The Beginning of Lending Operations for China Postal Savings
China Postal Savings and Remittance Bureau's initial success in microloans secured by time deposits
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This paper describes the initial success of the 'China Postal Savings (CPS) and Remittance Bureau' in offering micro-loans secured by time deposits. The note discusses:
- The background of the pilot project on micro-loans secured by time deposits.
- Development of the 'micro-loans secured by time deposits', stating that:
- These loans are small-sized term loans;
- The loan term is 12 months;
- The market for such loans is huge and consists of unmet demand for microcredit from middle- and low-income households in rural China;
- AS per the CPS, this kind of micro-loan can target small and poor farmers;
- These loans would enable CPS to conduct successful lending operations and develop other micro-loan products in the future.
- The administration of the micro-loans including:
- Upgradation of loan application and approval procedures;
- Improvement in management of branches and staff;
- Computerization to mitigate risks;
- Operation on two parallel channels;
- Application of the cash system to the interest income and expenses.
The note concludes by discussing:
- The expansion of the project into various provinces;
- The role of these micro-loans in making rural credit more accessible;
- A trial lending program for China Postal Bank;
- The help received from the bank regulator.
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