Research On Village Bank Regulation Legal System

Village banks are result of financial innovation in rural areas, since the Interim Regulations on Village Banks was promulgated on January22,2007, and as of the end of2011, China has gave birth to726rural banks. During operations in the past few years, the village banks have exposed many problems such as a single regulatory body, lack of flexibility in the means of regulation and departure from the agriculture supporting purpose. How to supervise them effectively and to protect the sustained and healthy development of rural banks in China is a very important issue in the operation of rural banks. So, I research on the supervision of the legal system of China’s rural banks system.This article has six parts, including the introduction and conclusion.The introduction part mainly elaborates the significance of the topic, the research situation at home and abroad, research methods, train of thought and innovation.The first part is about theoretical interpretation of the legal system of China’s village banking supervision, which is the general direction to guide the legal regulations of our village banks and the basis for the development of a specific legal system. Firstly, the scope of China’s banking regulation is defined in this paper, and this paper has adopted a general concept of banking regulation, including regulation by banking regulatory agencies and bank’s self internal management. Secondly, this paper shows the necessity of legal regulation of the village banks in China from two points of view, the first one is that the village banks in China were born with a strong negative externality and vulnerability, the second one is that the operations of the village banks in China have exposed many problems. Thirdly, in combination with Article2of the Interim Regulations on Village Banks and relevant regulation experiences of foreign banks, the objectives and principles of legal regulation on village banks are defined in this paper.The second part, the present situation of the relevant foreign bank regulation legal system and successful experiences are introduced, in order to give some inspiration for perfection of the village banks regulation legal system in China. In terms of personal credit and the bank’s internal control and other aspects, American community banks from which we can draw lessons; Bangladesh Rural Bank as the world’s largest, most efficient rural poverty alleviation mode, there are a lot of experiences worthy of our consideration in their operation and risk management; in terms of the regulatory bodies and modest of regulation, Japan’s local banks has certain inspiration to China’s villages banking regulation; People’s Bank of Indonesia, in terms of its governance structure, incentive mechanism and management methods have some guiding significance. On the analysis of relevant successful experiences of foreign banking regulation, and in combination with the conditions of our country, this paper has put forward some suggestions for perfection of village banking regulation legal system of our country.The third part, this paper has made a systematic analysis our country rural banking regulation legal system. Firstly, as for regulatory bodies of village banks in our country, according to China’s existing legal provisions and banking regulatory practices, the rural banks in China shall be regulated by the People’s Bank of China and the China Banking Regulatory Commission and I recommend to increase the co-supervision of the agricultural sector. China’s banking business scale and business complex degree are different, so the regulators cannot implement unified regulations and the regulations are of great difficulty. There are many places that the regulation does not exist. In addition, some scholars have pointed out that who supervises the regulators. Thereafter, the author suggests that the agriculture department is also responsible for regulation of village banks. Then, with the increasing of the number of village banks and the networks are to be more and more widely distributed, China Banking Regulatory Commission and the People’s Bank of China only can not achieve effective regulation, so the agricultural sector can help share a part of regulatory responsibilities. As the agricultural sectors clearly know the local conditions, so which can facilitate their regulations. Secondly, this paper has analyzed the main problems in China’s banking regulations:single regulatory bodies, ambiguity of regulation procedures; single means of regulation, lack of supervision experience; unduly strict market access regulation; departure from the agriculture supporting purposes; poor operability of information disclosure; lack of risk control mechanism and so on.The fourth part is the perfection of legal system of banking supervision. In light of the main problems in our country rural banking supervision legal system, and upon drawing lessons from the foreign banks’experiences, this paper offers some suggestions for perfection of village banks regulation legal system in our country. First of all, we have to develop specialized village bank legal system. Village banks as policy-oriented agriculture banks are different from ordinary commercial bank, in addiction to the increasing number of the rural banks, it is necessary to develop specialized village banks legal system, so as to protect the healthy operation. Secondly, we have to define the regulatory bodies and improve the means of regulation. In addition to the joint regulations of the People’s Bank of China and China Banking Regulatory Commission, we may add agricultural sectors as a regulatory body, so as to adapt to the banking regulatory specificity. In view of the present situation of single regulatory means, and upon drawing lessons from foreign experiences, we should make flexible regulation and undertake innovation to means of regulation. Thirdly, we should further relax market access regulation. This paper explains from financing channel, senior management staff regulation, and construction of the rational ownership structure. In addition, this paper has made some proposals for perfection of risk operation regulation on village banks in our country. This paper details from some aspects, such as credit management mechanism, information disclosure, risk control mechanism, realization of the object of agriculture supporting. Finally, we should perfect the legal regulations on market of rural banks in our country.In the conclusion part, which summaries the full text, and makes some forecasts for the village banks regulation legal system.