Small business big savior of mainland banks

Beijing (CNS) -- The question of how to design banking services for small and micro-sized companies is crucial to the survival of mainland banks, as large-scale institutes and corporations are gradually leaving banks for more economical and flexible financing channels, pointed out Vice President Li Yang with the Chinese Academy of Sciences (CAS) on Tuesday.

The Institute of Finance & Banking under CAS, acting jointly with the Baoshang Bank and several other institutes, held their annual conference on micro financing and inclusive development. Topics for discussion were the reform, development, and innovation of mainland microfinance.

Microfinance is a term coined by the World Bank in the 1970s. It refers to financial services encouraging productivity, raising incomes and supporting stable consumption with a focus on people living in poverty or on low incomes.

Microfinance in China enlarges that target to include all companies and individuals unable to obtain financial backing or services from major channels.

Solutions to the financing obstacles confronting small and micro-sized enterprises are key to the next economic boom on the mainland, in the opinion of Baoshang's president Li Zhenxi.

Dr. Li Yang suggested there are three essential considerations for microfinance development – a general microfinance plan that concerns a wider variety of financial services, a social regime that stands as a bulwark against risks, and a series of scientifically-based financial and tax policies.

He added that the reason why the mainland's large corporations and institutes, as well as some mid-scale companies have not abandoned the banks is for the clearing convenience offered rather than financing needs, and he has no doubt that financial services and products for small and micro-sized companies is a life and death issue for banks.