In May 2008, the Central Bank of China and China Banking Regulatory Commission jointly issued a guiding opinion on the trial operation on small loan companies. This marked the beginning of small loan companies in China.
Since opening, the small loan business has been welcomed by many consumers in second and third-tier cities and rural areas, due to its flexibility and convenience.
Xie Shangxue and his wife came to Shenzhen last June. With the expansion of their business they wanted to buy a van. But they couldn't qualify for a bank loan. A small loan business helped them a lot, Xie Shangxue says:
"We asked about loans from banks and they asked for our business certificate and other documents. We couldn't get the loan even we had credit. Later we chose the small loan service from Home Credit. It's easier and the interest rate is affordable for us."
Home Credit Consumer Finance started its business in China in 2007. Currently their finance business covers more than 60 cities nationwide.
The low income group is their target customer, like the migrant workers in Shenzhen. A customer with a salary of 3,000 yuan and wants to borrow 10,000 yuan, only needs to pay 200 yuan per month for the debt, and the loan procedure only takes about half an hour.
Milan Tomanek, director of government and public affairs of Home Credit, says their next step is to push their service to more areas and their customers will benefit from this.
"Our dream in China is to have a nation wide roll out. The roll out provided by the regulators will bring additional investments to China, will bring better access to consumer finance loans and services, and definitely will make loans cheaper."
Home Credit currently has more than 3 million customers in China. Students are one of their significant customer groups.
Jiri Smejc, CEO of Home Credit Asia says they value a big potential customer group, but they will also tighten the application procedure to lower the risks of the small loans to students.
"We tightened our procedures, and now for students, we are also strictly asking for consent from the parents."
Figures from Central Bank of China show that by the end of the third quarter in 2012, there were more than 5,600 small loan companies across China.
For CRI, I am Li Dong.
