在中国蓬勃发展的小额消费贷款

Xiao Zhang is a fan of digital products. He's been longing for an iPhone for some time, but his budget does not stretch to the 4000 yuan plus price tag. However, while browsing, Xiao locates a counter at a home appliance store which issues small consumer loans. He was very excited.

The manager says Xiao Zhang only needs to pay a 1500 yuan down payment and 330 yuan per month for the phone. Xiao Zhang feels that this method of payment is very suitable for his situation.

"I didn't expect to be able to apply for a loan so quickly. There's no trouble for me to afford the 330 yuan payment every month. So I will consider using this method later if I need to buy another electrical appliance."

Within 30 minutes, Xiao Zhang has realized his dream of owning an iPhone. He doesn't have to offer a mortgage guarantee nor does he need to worry about overdrawing on his credit card. The whole process of issuing the loan is very simple.

Beginning last year, the first batch of consumption financing companies emerged in China, mainly offering personal financial services including small consumer loans. Manager Yuan Yaozhang works for the Bank of Beijing Consumer Finance Company.

"The shortest period of time for issuing a personal consumption loan is only 20 minutes, exactly what we want to provide to the consumers."

To start this kind of business, these financing companies are not allowed to collect public funds, but have to prepare a certain amount of initial capital. After a period of time running their business, they can apply for loans from commercial banks based on their market performance.

According to regulations released last year by the China Banking Regulatory Commission, consumption financing companies can only issue loans to consumers buying electric home appliances, and electronic products, or those collecting funds for personal travel, wedding, and education and home renovations. Such loans do not cover home and car purchases. It also confines that the loan limit should not exceed five times of the borrower's monthly income, and the loan rate should not be higher than four times of the benchmark rate set by the banks.

By the end of July, the first individual consumption company in China, the Bank of Beijing Consumer Finance Company issued more than 140 million yuan worth of personal loans. More than 80 percent of the borrowers have a monthly income lower than 20 thousand yuan. 65 percent of the single loan amount is lower than 20 thousand yuan, and is used mainly for daily expenses. Manager Yuan Yaozhang says this kind of consumption format has great potential in China.

"In the future, we will not only focus on urban consumption services, but will also try to reach the suburban areas. Districts like Tongzhou and Daxing are developing very fast with strong local policy support. We will consider expanding our business to the whole country."

In European countries and Asian countries like Japan, consumption financing companies take up 30 percent of the individual loan market, alongside loan services from credit cards and commercial banks, provided for the purpose of individual consumption. But in China, such business are only now beginning to pick up momentum. Such an option offers flexible loan rates based on an individual's income, which is considered more competitive than credit card and commercial bank loans.

For CRI, I'm Liu Min.