Highlight on China, Part 2 - Interview with China Development Bank

As part of the Microfinance Gateway Highlight on China, Part 2: Financial Service Providers, four interviews were conducted with financial service providers to gain their insight on the current microfinance landscape in China. This interview provides the perspective of Ms. Wang Fei, Deputy Director of the Microfinance Core Team at the China Development Bank (CDB), on the current microfinance landscape in China. Ms. Wang Fei states that the important issues that need to be addressed urgently as financial services expand to rural China are:

• Providing farmers with urgently needed loans with a low threshold;
• Addressing the demand-supply gap in rural financial services;
• Developing credit techniques that control risks and keep operating expenses reasonable;
• Training staff.

Elaborating on CDB, she adds that:

• CDBs structure of operations is as follows:
  • Partnering with small and medium commercial banks, urban and rural credit cooperatives to develop the microcredit business;
  • Appointing an advisor to guide partner banks;
  • Providing partner banks with loans to fund their lending program and monitoring and coordinating these programs.
• It has loaned to seven partner institutions a total of $ 116 million, through 13,886 loans, the default rate is 0.17%;
• 450 employees have been trained in lending skills;
• CDB maintains cost efficiency and portfolio quality by:
  • Implementing strict internal controls;
  • Standardizing loan products and procedures;
  • Monitoring microloan programs, and providing technical assistance.
• The major challenges include:
  • Controlling costs;
  • Building organizational capacity;
  • Assimilating microloan techniques.

The interview concludes by describing CDBs contribution to:

• Making financial services available to the rural population in China;
• Helping banks overcome institutional bottle necks and innovate.