Monday, August 30, 2004

A quick vent: although I appreciate Premier Wen's effort to introduce more equality to Chinese society, he, like Zhu, has given in to the temptation of using state capacities left over from the planned economy to accomplish current policy goals, thereby delaying reform. Recently, the PBOC and the CBRC ordered banks to provide student loans to students from poor families. While that is commendable, why is the Chinese government still ordering commercial banks to do its bidding. Why not set up a special fund in the MOF to do this? Why not ask the State Development Bank to do this? True, the reach of the Big Four is still the widest in China, but the MOF can still hire the Big Four banks to manage this special student loan fund. I think a lot of NPL will come out of this...sigh.....

Tuesday, August 31, 2004Banks told to make student loans a priorityLenders threatened with punishment if they don't take step 'central to stability'
Prev. Story Next Story

Parents wait outside a Beijing school as their children take university entrance exams. Only 5 per cent of students have taken out loans. Reuters photoMainland banks have been urged to offer education loans to poor students starting university next month, with authorities saying the issue is central to the social stability and training requirements of the nation.
China's central bank and the China Banking Regulatory Commission told lenders at the weekend they were to treat student loans as "an important task to guarantee the smooth entry of poor students into universities".
Central bank branches and commission bureaus at all levels were told to recognise the importance of the loans policy, while commercial bank headquarters were urged to encourage provincial branches to extend the credit.
"Commercial banks should not set any restrictions on state education loans," the notice said. "Those failing to make timely student loans in line with state policies and regulations will be investigated and dealt with strictly according to law."
The notice was apparently prompted by recent media reports that several parents who could not afford school fees and were denied loans had resorted to dramatic measures.
Earlier this month, a mother in Jilin province hanged herself after her son was told he had been accepted into a university. It is understood the mother - 48-year-old Zhao Liqin , who suffered from a chronic disease - killed herself because the family could not afford to pay both her medical bills and her son's tuition.
Zhou Hongling , head of the Beijing New People's Education Research Centre - a non-governmental research group - questioned whether the central bank and the commission could make such a demand.
"The authorities have no legal right to order commercial banks to do this - they are not the administrative superiors of commercial banks," Mr Zhou said. "So it is not known whether the notice will work."
Subsidised loans for university students were introduced in 1999, when the government ended full college subsidies and higher education costs started to soar. Tuition fees shot from several hundred yuan a year in the 1980s to as high as 8,000 yuan at some top universities.
Most banks suspended loans at the end of last year because of defaults on more than 20 per cent of borrowings.
Three years ago, the central bank blamed the defaults on an unsound social credit-rating system, students relocating after graduation, and the banks' poor ability to trace loans.
But demand for financial support is huge. A survey of 20 universities carried out last year by the China Foundation for Poverty Alleviation found that about 20 per cent of university students needed financial support.
The mainland has 16 million university students, but by the end of March, only 5 per cent had taken loans.

Keep up the great work. Enjoyed your blog. I specialize in industrial property loan
Nice blog. Please check out my nonprofit debt consolidation blog. It is all about nonprofit debt consolidation.
Hey, you have a great blog here! I'm definitely going to bookmark you!
I have a free debt consolidation services
site/blog. It pretty much covers free debt consolidation services
related stuff.

Come and check it out if you get time :-)
I like your blog. Check out my free bankruptcy form blog.
Post a Comment

This page is powered by Blogger. Isn't yours?