The Analysis On Risk Prevention And Control Measures Of Small And Medium Bank To Small And Medium Enterprises

Since the financial crisis, to support for financing power, the government has issued anumber of policies to solve the financing difficulty of Small and Medium-sized Enterprises(SMEs). As one of the main business in the bank, credit business is the basis of maintainingbanks surviving and growing. Especially, it is the most important mode of financing forSMEs. Under the circumstance of which bank financing market is gradually mature andwinning large high quality customers by big banks is fiercer, small and medium-sizedenterprises will become a new focus on bank credit business for various small andmedium-sized commercial banks which increase competitive power. The main risk ofcommercial Banks is credit risk. Therefore, it is very important that research on credit riskto increase credit business, ensure assets management safety, profitability and prevent creditrisk.According to the survey of international finance corporation in domestic projectdevelopment center, more than50%financing summation of Chinese small andmedium-sized enterprises financing combined rely on private lending and commercial bankloan financing methods. And from the view of development of commercial banks, it is aninternal need that develops credit business of small and medium-sized enterprises, whichcan reduce the risk of concentration, adjust the business structure and increase profits, etc.The first part of this article is the preface which introduces background andsignificance of the topic, literature review of at home and abroad, research content andways, innovation and research prospect of this article. The second part proposes the basicaspects of SMEs credit management risk, which is divided into loan commitments, creditrationing, transaction costs and information asymmetries, and also describes credit supportmode, the target and the cycle, institutions and revenue model of credit risk managementfor SMEs. Then this article introduces the basic characteristics of credit risk management toSMEs in small and medium commercial banks，including the shortage of self-owned fundsin financing, lack of collateral, relatively few capital demand and higher frequencies inborrowing. In order to study the development of SMEs credit difficulties in the commercialbanks, the third part discussed in two ways: First, there is no credit risk management forSMEs scale. Second, the information is asymmetry between banks and enterprises. Aimingat two ways, this article analyzes the risks and development status of SMEs in loan businessmanagement by taking Tianjin Branch of China Everbright Bank as an example and usingcase analysis method, which include the basic flow of bank credit operations, riskprevention measures, related technical indicators。At the same time, the risk managementtechniques, the degree of attention from the credit risk management, loan after the inspection system, payment regulation, capacity of dynamic monitoring, the departmentdivision of functions and excitation mechanism are also proposed. The fourth part is thesuggestions on credit risk management on SMEs by Tianjin Branch of China EverbrightBank. This article suggests that domestic small and medium banks should learn foreignexperience and advanced modes in the bank credit risk management in order to strengthencredit investigation, encourage credit model to innovation, make a sound credit guaranteemechanism and improve the mechanism and other aspects related to SMEs credit method,which is aiming to the background of domestic capital market not currently developed andinadequate credit system. Specific ways of that include accessing rigorous risk, laying thefoundation of credit management, credit officers due diligence, unifying investigationreport templet and perfecting survey content, and also analyzing accurately customer creditrisk. Then small and medium banks also should improve monitoring and inspection systems,establish risk early warning system to take timely risk mitigation measures. Meanwhilethis article proposes capital protective measures for controlling and disposingnon-performing loans (problem loans), revitalizing measures mainly including loanextension, refinancing, appending new loans, replacement guarantee, and the lender banksto participate in the daily operations of such assets. In addition, this article also introducessome evaluation methods based on the actual experience of banks’ credit business so as tograsp the borrower’s actual production and operating conditions in timely control of creditrisk.SMEs credit risk management is an important component of bank credit managementand also an important means to prevent and mitigate credit risk. Now the general problemsexist in domestic commercial banks that high non-performing credit assets and largerpotential risks, which are seriously undermining the competitiveness and threatening thesurvival and development of commercial banks. It has aroused great concern in thecommunity. Therefore, it becomes an urgent task to strengthen SMEs credit riskmanagement, improve the quality of credit assets and reduce non-performing loan ratio forcommercial banks. So, studying and analyzing the credit risk management status andstrategies for SMEs of Tianjin branch of China Everbright Bank, is not only having thetheoretical and practical significance for the development of credit business for TianjinBranch of China Everbright Bank, but promoting Chinese commercial banks, especially forsmall and medium-sized commercial banks, in credit risk management.