Highlight on China, Part 2 - Interview with China Post

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 with Mr. Zhu Dapeng, Director of the Credit Department of the Postal Savings and Remittance Bureau at China Post, provides his perspective on the current microfinance landscape in China. The interview poses questions about:

• The structure of operations of the full postal bank that China Post has opened;
• The maintenance of cost efficiency and portfolio quality;
• The major challenges to Postal Savings.

Mr. Zhu Dapeng states that:

• The Postal Savings Bank of China (PSBC):
  • Offers three types of loan products;
  • Focuses on the quality of institution building and staff management;
  • Is building a team of staff trainers;
  • Has a collective decision-making mechanism;
  • Intends to gradually decentralize the power to veto the granting of loans.
• PSBC maintains portfolio quality and cost efficiency by:
  • Making the head office the only source of loan funding;
  • Screening clients;
  • Keeping loan amounts small and having appropriate interest rates;
  • Implementing credit transparency and a reporting system;
  • Improving credit technologies;
  • Establishing a performance incentive structure.
• The major challenges are:
  • PSBCs lack of experience in small loans;
  • Lack of staff preparedness;
  • Difficulty in enforcing liens in rural areas;
  • High costs.