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Perspectives on Risk Management from a Policy Bank

Assessing the risks faced by the Chinese microfinance sector
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This is an interview with Mr.Guo Rui, the Deputy Director of the Third SME Division Project Appraisal Department of the China Development Bank (CDB). The interview is part of a series of interviews with leading Chinese MSME players conducted by PlaNet Finance. The series focuses on risk management methodologies and asks the interviewee to discuss the most relevant risk factors both from their own individual institution as well as the Chinese industry as a whole. CDB launched a small and medium-sized enterprise (SME) financing project in 2005. As of 2011 year-end, the total value of SME loans reached RMB 1.55 trillion (about USD 244 billion) supporting 1.8 million SMEs, individual entrepreneurs, and farmers. The interview discusses:

  • China Development Bank’s support to microcredit companies (MCCs) through wholesale loans and support in the transformation to village and township bank (VTB);
  • Development trends of the Chinese microfinance sector, including accomplishments and lingering problems;
  • Main risks facing the Chinese microfinance sector in the coming years, including policies and regulation, corporate governance, and growing competition.