Study On Risk Management Of TY Small Loan Company

Difficulties in financing for SMEs have always been the primary issue that plagues the development of enterprises.Although the state has introduced a number of support measures to address the funding needs of SMEs,China started the micro-loan company pilot project in October 2005,which became an important tuning point.Henceforward,micro-loan companies were flourishing like bamboo shoots.As the new things for finance market,it reliefs the loans difficulty for agriculture,rural areas and farmers,and it also brings positive effects for secured loans for small and micro enterprises.It becomes the significance supplement of finance services.Micro-loan company's clients are generally the sub-prime clients of banks.Thus the company is facing more risk compared with banks and financing institutions.How to control the risk effectively became the requirement of sustainable development for Micro-loan Company.The evaluation was done for TY Micro-loan Company risk management.Weaknesses were found in organization structure,company culture establishment,human resource management,risk identification,communication and dynamic monitoring,which might cause the various credit risk.According to operation process analysis and related employee interview,three-level quality risk system and 74 credit risks were obtained.Finally,the key risks which were identified in pre-loan investigation,mid-term investigation,after-loan investigation and overdue loan clearing and recovering are as follows:the completeness and authenticity of clients'information,noncompliance of pre-loan investigation,loan decision-making mistake,pledge procedure noncompliance,loan process noncompliance,loan contract noncompliance,after-loan investigation noncompliance,clients' crisis,tardy emergency plan and lack of dynamic monitoring.Furthermore,risk handling measurements were made for each key risk.For the deficiency and weakness in TY Micro-loan Company risk management,it is stated improvement approach for internal environment optimization,risk management target optimization,internal control and supervision improvement,information and communication perfection to avoid loan risk effectively.Moreover,it is also necessary to strengthening company cultural construction,improving staff quality,improving organization structure,set up compliance audit department,identifying department responsibility.It also included HR management optimization,which means reasonable staff allocation,good talent reserve,and high work efficiency.Furthermore,it is recommended to adjust loan structure,enrich business variety,promote new business development,and rise business growth point and profit point.Internal incentive system establishment is also needed,which could motivate employees'potential and working enthusiasm.Making perfect appraisal mechanism and responsibility assigning mechanism is included in these improvement approach,which might raise loan quality.Moreover,set up information sharing platform for internal and external,broaden information channel in order to prevent all kinds of risk.The aim is to upgrade risk management level of TY Micro-loan Company that could drive sustainable development for the company and then provide reference of micro-loan company development in Jinan City.