PBOC may open system to 10 small loan firms

Ten small loan companies may be given access to the People's Bank of China's credit rating system if the central bank is satisfied with a trial run that is being conducted, the chairman of one of the candidate companies said Tuesday.

The PBOC is reviewing reports submitted by selected small loan companies of their operations in the past three months in the first round of the trial run. They also need to submit operational reports of the first three months of this year for a second-round review. The central bank will then decide whether to open the system to the companies based on the reviews, Song Mei, chairman of Shanghai-based Jishiyu which is one of the firms in the trial run, told Shanghai Daily.

The credit rating system run by the PBOC provides financial institutions with personal credit history to enable them to evaluate risks of potential borrowers. The system opened to all commercial banks in 2005.

Small loan firms play a vital role in providing credit to small and micro businesses, especially sole proprietors in China, that find it hard to get a bank loan as they lack collateral and complete financial records.

There are more than 1,000 small loan companies in Shanghai, according to Song.