To improve the risk management capabilities of rural credit cooperatives, the key is to strengthen the pace of reform and innovation and further improve and improve the culture, system, mechanism, tec

To improve the risk management capabilities of rural credit cooperatives, the key is to strengthen the pace of reform and innovation and further improve and improve the culture, system, mechanism, technology and other aspects of risk management. 1. Cultivate an advanced risk management culture for all employees. Risk management culture determines the risk management concepts and behavior patterns in the operation and management process of rural credit cooperatives, and it penetrates into every aspect of rural credit cooperatives' business. After the establishment of the Provincial Federation, it attached great importance to the construction of corporate culture and proposed "diligence, loyalty, rigor, and pioneering" as the entrepreneurial spirit of Jiangxi Rural Credit Cooperatives. This is also the real source of cohesion and creativity of rural credit cooperatives. Because only advanced corporate culture, especially risk management culture, can make the rules and regulations we formulate truly play their due role. Improving and cultivating risk management culture and strengthening the risk management awareness of all employees are the prerequisite and foundation for rural credit cooperatives to manage non-performing assets and prevent financial risks.

2. Establish and improve a risk management system. With the development of the financial industry, the innovation of financial instruments, and the gradual marketization of interest rates, rural credit cooperatives are facing increasing risks. Therefore, rural credit cooperatives urgently need to establish and improve a risk management system. They must not only strengthen the management of credit risks, but also include market risks, interest rate risks, financial risks and other risks into the scope of risk management, and establish appropriate risk management systems. management system. In terms of risk management, the focus should be changed from the traditional emphasis on separation of review and loan to the construction of a comprehensive risk system; in terms of technology, it should be changed from qualitative analysis to a combination of qualitative and quantitative analysis. Technically speaking, the internal ratings-based approach is one of the core contents of the New Basel Capital Accord. While we are learning these advanced risk management measurement methods, we must also deeply realize the importance of learning and mastering advanced risk management concepts. It is necessary to take the reform as an opportunity to innovate management technology and establish a comprehensive risk management system to prepare rural credit cooperatives to better participate in market competition.

Credit cooperatives take root in rural areas and serve "agriculture, rural areas and farmers" and are the main force in financial services in rural areas. The healthy development of rural credit cooperatives is directly related to the smooth solution of my country's rural issues, and is of great significance to building a well-off society in an all-round way. From August 2 to 5, 2004, the author conducted a special survey on county financial service issues in Shaoyang County, Shaoyang City, Hunan Province. Shaoyang County is located in the upper reaches of Zishui, adjacent to Shaoyang City, with a total area of ??1,996.88 square kilometers and 703,900 acres of cultivated land, including 499,300 acres of paddy fields and 1.01 million acres of forest land. The county governs 22 townships (towns), 3 agricultural and forestry farms, and has a population of 924,100. Agriculture is mainly planting, and it is somewhat representative of traditional agricultural areas. The investigation found that the current operation of rural credit cooperatives has turned around; if some deep-seated conflicts can be properly handled, rural credit cooperatives will be able to embark on the fast track of healthy development.

1. The operation of rural credit cooperatives has turned around

Since 2000, under the guidance of the People’s Bank of China, rural credit cooperatives have used microcredit as a breakthrough to change their business concepts and adjust their operations. ideas, strict internal control systems, and strengthened risk prevention. Through the joint efforts of the majority of employees, its operations have finally come out of the trough and shown a momentum of healthy development.

From January to May 2004, the deposit balance of rural credit cooperatives in the county reached 798 million yuan; a net increase of 93.29 million yuan from the beginning of the year, completing 97.2% of the municipal office's task of allocating deposits in Shaoyang County; cumulative loans were 2.8 100 million yuan; the balance of non-performing loans was 195 million yuan, accounting for 31.4% of all loans, a reduction of 19.96 million yuan from the beginning of the year, a decrease of 13.8%; the principal and interest of rights protection loans was collected at 601,000 yuan, and there were 8 cases of protecting the rights and interests of credit unions, with an amount of 660,000 yuan .In addition, credit unions provide loans in a timely manner in order to ensure the funds needed to support agriculture. From January to May, a total of 154.86 million yuan of loans were issued to support agriculture.

Based on the actual situation, Shaoyang County Rural Credit Cooperative started by improving services and vigorously organized funds to enhance the financial strength of the credit cooperative. As a result, it also launched many "special businesses."

The first is to seize the fact that labor income is the main source of cash income for farmers in the county, strengthen emotional contact with laborers, and use the favorable opportunity of a large number of migrant workers to return to their hometowns during the Spring Festival to mobilize their deposits; the second is to target the credit union's weak corporate deposits Characteristics, the association and each credit union will report their work status to the local party and government to strive for the local party and government to pay attention to the work of credit unions. The third is to seize the opportunity of lower postal savings interest rates for new transfer deposits and seize the market share of postal savings; the fourth is to actively carry out amateur savings activities and provide door-to-door services; the fifth is to hang banners, slogans, request songs, and send New Year's greeting cards and other methods to enhance the industry image of credit unions, increase visibility, actively stabilize old customers, and expand new customers.

In order to improve asset quality, credit unions pay close attention to loan quality management. The first is to classify customers, conduct house-to-house surveys of existing customers, and set up files to identify Fengxian customers among credit customers. Low-quality customers and inferior projects will be restricted and eliminated so that they can withdraw from the credit customer market; secondly, the "Excellent Customer Management Measures" and "Credit Fengxian Customer Management Measures" formulated by the Municipal Office will be actively implemented; thirdly, the construction of credit infrastructure will be strengthened. Electronic loan management; fourth, follow-up management of new loans. The recovery rate of new loans must reach 96%, and non-performing loans should be controlled within 4%. If the requirements are not met, the loan will not be reviewed and only old loans can be collected; fifthly, the "three guarantees" responsibility system for loans will be implemented. Loan disbursement must be "guaranteed release, collection and benefit"; sixth, establish a loan risk accountability system. Seventh, the agent's right to lend is cancelled. Agents can only collect deposits and clear loans. Small loans to farmers are also required to be processed at the counter of the credit union. Coupled with the strengthening of supervision, Shaoyang Associated Press not only turned losses into profits, but also achieved profits for three consecutive years.

2. Deep-seated contradictions that plague the development of rural credit cooperatives

The turning point in the operation of rural credit cooperatives does not mean that their future development path will be smooth. At present, there are still a series of deep-seated contradictions that are plaguing the further development of rural credit cooperatives. These contradictions are mainly: (1) The ratio of non-performing loans is high and the historical burden is heavy. According to statistics, by May 2004, the rural credit cooperatives in Shaoyang County had 195 million yuan in non-performing loans, accounting for 31.4% of the total loan balance. This ratio not only far exceeds the standards generally accepted by the international banking community, but is also much higher than the level of state-owned commercial banks. The reasons for the non-performing loans of rural credit cooperatives are relatively complex. The main reasons are: when the Agricultural Bank of China broke away from the custody relationship, the Agricultural Bank of China consciously transferred risky loans; when urban credit cooperatives and rural foundations merged into credit cooperatives, they also brought some non-performing assets with them. Joined a rural credit cooperative; during the "project craze" and "development zone craze" in the early 1990s, rural credit cooperatives were subject to local administrative intervention and issued loans in order to cooperate with the "overall situation"; enterprises maliciously evaded credit union loans and suspended credit cooperative loans; and Poor management, etc. Not only that, in order to curb inflation, the state has stipulated that residents’ savings deposits should be subsidized for value preservation, but loan interest rates have not been increased accordingly. The result of "the state issuing policies and financial institutions footing the bill" is that value-preserving subsidies have become a heavy burden for rural credit cooperatives. According to statistics, rural credit cooperatives have increased interest expenses by 71.98 million yuan in value-preserving savings alone. Under the weight of non-performing assets and policy burdens, rural credit cooperatives have been in a difficult situation of serious insolvency for a long time. Due to the inability to obtain returns on investment, the majority of farmers are unwilling to invest in rural credit cooperatives. In addition, local governments are limited by financial resources and cannot invest heavily. The capital of rural credit cooperatives cannot be replenished, the corporate governance structure cannot be improved, a scientific management system cannot be established, and true economic accounting cannot be implemented. .

(2) Independent management is suppressed. For rural credit cooperatives, the People's Bank of China currently plays the dual role of supervisor and custodian. But these two functions are in conflict with each other. In order to reduce regulatory pressure, the People's Bank of China has a tendency to inhibit the vitality of rural credit cooperatives.

(3) There is a large outflow of funds from counties, and the business environment needs to be further improved. The withdrawal of state-owned commercial banks has created good external conditions for rural credit cooperatives to operate, but it has also brought about the problem of large outflows of funds.

Due to the contraction of lending, county-level branches of state-owned commercial banks had to deposit a large amount of idle funds. Coupled with the absorption of postal savings, a large outflow of funds from the county economy was formed.

(4) The term structure of a small number of agricultural loans is unreasonable. According to the survey, more than half of the loans to farmers are used for agricultural production.

(5) The management level is low and the quality of employees cannot meet the needs of business development. Many leaders of credit unions have deep feelings when it comes to talent issues. They all feel that the biggest problem restricting the development of rural credit cooperatives is actually the lack of talents. Talent is also an asset, the first asset. However, at present, rural credit cooperatives are short of talents. Their employees have low educational level, low professional and technical level, poor business ability, and the quality of personnel is far lower than that of commercial banks. These are no longer suitable for the reform and development of rural credit cooperatives. need. Strengthening human resources management, making good use of talents, cultivating talents, retaining talents, and attracting talents in a people-oriented manner is a very important and urgent task for rural credit cooperatives to achieve sustainable development.

(5) Small scale, poor innovation ability, and backward service level.

3. Countermeasures and Suggestions

Currently, with the major adjustments in financial organizational structure and business strategies, rural credit cooperatives are facing rare development opportunities. However, only by resolving the above-mentioned deep-seated contradictions can rural credit cooperatives embark on a path of sound development, thereby better serving "agriculture, rural areas and farmers" and their members.

(1) Clarify the commercial development direction of rural credit cooperatives and promote the joint-stock reform of rural credit cooperatives in a timely manner. (1) From the perspective of capital composition, due to the large number of non-performing assets in rural credit cooperatives, farmers and economic entities are unwilling to invest in credit cooperatives. The capital of rural credit cooperatives mostly comes from government investment and employee shares; (2) From a regulatory perspective , which is applicable to rural credit cooperatives and is also the regulatory standard for commercial banks (3) Judging from historical experience, an important reason for the generation of huge non-performing assets is that it fails to follow the laws of market economy and ignores the extreme importance of economic accounting; (4) From international experience, financial sustainability is one of the important prerequisites for the success of microfinance institutions.

(2) Take measures to lift the heavy historical burden of rural credit cooperatives. As mentioned earlier, the historical baggage and non-performing assets of rural credit cooperatives are caused by various reasons. The state has taken measures to strip away the historical burdens of state-owned banks caused by policies and systems. In this case, if the government ignores the policy and institutional non-performing assets of rural credit cooperatives and requires them to digest them on their own, it will artificially create an extremely unfair external environment for rural credit cooperatives. Furthermore, relying entirely on expanding deposit and loan interest rate spreads and using the profits of credit unions to absorb these historical burdens will not only take a long time (it may even happen that the meager profits of credit unions are not enough to repay the huge interest on non-performing assets, eventually leading to historical debts). (the phenomenon of bills getting bigger and bigger), and its essence is to transfer the historical burden of rural credit cooperatives to farmers, which is directly contrary to the central government's policy of "giving more, taking less, and letting go".

(3) Create a good external environment for the development of rural credit cooperatives. (1) Appropriately relax restrictions on loan interest rates. (2) Expand the credit union’s funding sources through multiple channels. (3) Preferential fiscal and taxation policies, appropriately reducing or exempting rural credit cooperatives’ business tax and income tax, relaxing restrictions on write-off loan losses, etc.; (4) Appropriately increasing the operational autonomy of rural credit cooperatives. On the premise of strengthening management and strictly controlling risks, rural credit cooperatives should appropriately increase their autonomy in hiring and setting up outlets; increase their autonomy in interest rates and loan terms.

(4) Establish provincial (municipal) level industry associations to effectively strengthen business guidance for rural credit cooperatives and improve the business level of rural credit cooperatives. The new industry association will assume the business guidance function of the People's Bank of China for rural credit cooperatives, and will be specifically responsible for the personnel training and improvement of rural credit cooperatives (or small financial institutions) within the province (city), and work with counterparts outside the province (city) and even abroad. exchanges, promote new technologies and new management methods, formulate industry management standards, policy research and business guidance, etc.

(5) Further purify the rural credit environment.

It is necessary to speed up the construction of the social credit reporting system; speed up the establishment of loan guarantee institutions; intensify efforts to crack down on debt evasion and default, and create a good social atmosphere in the whole society where "keeping faith is glorious and defaulting on loans is shameful"