Research On Legislation Of Private Lending In China

The development situation of the private lending and the shortage of the currentlegal system embody the necessity of legislation about the private lending in China.However, the legislation of China’s private lending also faces many theoretical andrealistic difficulties and obstacles. Many defects exist in the current laws, so theinterest rate liberalization and lending among enterprises, advocated by the privatelending, are difficult to achieve for the present. If these problems and contradictionscan not be scientifically solved, China’s private lending will not be able to get areasonable regulation. Therefore, analyzing and solving the above problems properlywill have important significance for the problem research of legislation about privatelending.There are certain bottlenecks in the legislation research of China’s privatelending both in theory and practice. The selection of legislation model and thedetermination of regulatory scope directly relate to the effect of legislation about theprivate lending. This paper objectively analyzes the theoretic and realistic difficultiesof China’s private lending legislation. For the realistic difficulties, the author thinksthat it can promote the reform of China’s interest rate liberalization in stages.According to the current development of financial market in China, the currentlegislation can adopt the method of limiting maximum interest rate; further improvethe credit policy in China and give more support to small and medium-sizedenterprises to provide a good environment for China’s lending markets, reduce thepressure of enterprise financing, avoid the risk of lending among enterprises, andallow the lending among enterprises with limitation in the legislation; Continue topromote the reform of financial market in Wenzhou and improve the effect of reform.The above improvements have important practical significance to the legislation ofChina’s private lending.This paper provides suggestion for the legislation of China’s private lending inthree aspects: firstly, the scientific selection for the legislation model and regulationapproach. The author thinks that the private lending law in China should be a compounded legislation model combined by the basic law of private lending, relevantmain laws and other department laws, and a key regulation approach that combinesgeneral regulation and the special one; secondly, China’s private lending has beenlacking guiding principle for a long time, therefore, the author suggests that thelegislation of China’s private lending should build up four particular principles: theprinciple of financial rights equality, which requires the protection of equal status ofprivate lending compared with formal finance, and the guarantee that the main bodyhas equal rights and obligations; the principle of autonomy of both loan parties’ will,ensuring the independence of the private lending, reducing the limit caused by publicpower, guaranteeing that both parties of the private lending enjoy equal status; theprinciple of profit protection, which confirms the commercial lending in law, protectsthe legal rights and interests of the main body in the private lending, and allows theprofit-seeking behavior engaged in private lending; the principle of risk control,requiring the private lending to insist on the risk control principle of internal controland external supervision. Finally, the legislation of private lending should consider theshortcomings of current laws and make up for them through legislation. The emphasisis to make clear the rights and obligations of the main body in private lending,establish the supervision system which combined by government and industryassociation, make a clear distinction between civil and criminal liability, build andimprove other systems.