Research On The Credit Risk Management Of L Rural Commercial Bank

Recent years, with the rapid development of China’s financial market, Rural credit cooperatives alsostrengthened its social status constantly. The Rural credit cooperatives is the main force of the village’sfinancial market, which serves as an important role in helping the agriculture-rural areas-farmers, the localeconomy as well as the companies, making great contributions to the sustainable development of thecountryside. However, due to the underdevelopment of the village’s financial market, the Rural creditcooperatives shows its weaknesses in increasing the types of asset transaction and financial tools, as a result,it main industry still is credit business. With the gradually opening step of the bank market, manycompetitive overseas commercial banks are targeting at China’s village financial market. Therefore, theRural credit cooperatives is facing a more and more serious credit risk, which draws a significant attentionfrom the bank managers. Credit risk is one of the major risks that the China’s Rural Credit Cooperatives isencountering, because they hasn’t completely solved the problem in the reform, remaining a lot ofnon-performing loans and causing a higher risk for themselves compared with other banks. Strengtheningthe management for credit risk and establishing scientific credit risk prevention system is a task of toppriority for the Rural credit cooperatives. Presently, most village’s commercial bank is transformed by theRural credit cooperatives, so it is similar to the Rural credit cooperatives. The following passage will takethe bank of city L as an example (as used in this article the partial data confidentiality, so L county insteadof the real name), to analysis the credit business’s risk. The village’s bank of city L is also transformed fromthe Rural credit cooperatives, so it the village’s bank is also left with the similar problem such asnon-performing loan and the high risk of the credit business.The passage is based on the management for the risk of credit business in village’s commercial bankof city L. It is consisted of six parts. The first part includes the introduction of its background, aim,meaning, method and the Innovation of the passage; Part two includes the main idea of the management forthe risk credit business as well as the introduction of the situation about the commercial bank’smanagement for the risk credit business, at home and abroad; The third part is the analysis of the conditionof the management for the risk of credit business in city L. First, we will introduce the situation of city L and then we will analyze in depth, concerning the main content of the management for the risk of creditbusiness in city L. The management for the risk of credit business is five categories of loans, the situationof Censoring system, customer credit rating system, credit management system, the management of badloans, loan guarantees, the development of the provision for loan loss reserves, the credit assets isanalysised in the view of the structure of the deposit growth rate, the quality of loans, non-performing loansand concentration of loans. In the end, we pointed out three questions, which are the management for therisk of the credit business in city L, including the lack of effective system for the risk bell, the way forindividual credit rating and the low quantity of the business people; Part four discusses the factorscontributing to appearance of the risk internally and externally. The external factors are as following, thelack of beneficial credit environment, information asymmetry, unacceptable legal environment and theimproper intervention from the government. As for the internal factors, they are the loose foundation, theshortage of the management of loan process and the healthy culture of loan; In part five, methods toimprove the situation are put forward respectively, in accordance with the Credit mechanism, credit riskearly warning system, a personal credit rating, credit personnel training, improvement of the externalenvironment and the construction of control system, along with the enhance of credit culture; In the lastpart, we will summarize the analysis and the conclusion we made in this passage.