Research On The Main Sponsor System Of Rural Banks

Rural bank(also called Village Bank,Community Bank,County Bank)is a kind of commercial bank in China.It is a banking institution in China with the smallest single asset scale and the most grassroots service targets.It is also the most typical banking institution in China that provides inclusive financial services.The main sponsor system of rural banks is the core system of rural banks,and it is also an important legal system in the banking industry of China,this system plays an important role in the development of China’s inclusive finance services,which also has important value in the context of The Rural Revitalization Strategy.The system mentions,the main sponsor is the largest shareholder of a rural bank,it is also the core subject of the operation management of a rural bank,and the main sponsor must be a banking institution.As an important system with a systematic and overall situation,the main sponsor system of rural banks has four major values: Encouraging China’s banking institutions to practice inclusive financial services;Improving the overall inclusive financial service capabilities of China’s banking institutions;Disseminating nice governance experiences for rural banks;Preventing and resolving financial risks.However,there are three practical dilemmas that affect the implementation effect of the main sponsor system of rural banks: Firstly,banking institutions lack motivation to form and operate rural banks;Secondly,the market positioning of the main sponsor has a great impact on the rural bank;Thirdly,the poor performance of some main sponsors affect the stability of the company operation of rural banks.It is the existence of these practical dilemmas that hinder the comprehensive and effective realization of the value of the main sponsor system of rural banks.However,this does not mean to deny and criticize the main sponsor system of rural banks,because the system is still very advanced.In fact,the formation and continuation of these practical dilemmas are related to the imperfect design of relevant legal systems and supporting rules in China.Specifically,the reasons for China’s banking institutions lack motivation to form and operate rural banks,is related to the fact that the relevant laws of China do not clarify its importance and lack key incentive objects;The market positioning of the main sponsor has a great impact on the rural bank,is related to the fact that the main sponsor has become the only bank-institution-shareholder of a rural bank,the lack of special regulations for overseas main sponsors,and relevant commercial entities lack enthusiasm to invest in rural banks;Some of the main sponsors did not perform their duties well,is related to the fact that lack of differences in the access conditions for different local sponsors,deficiencies in the risk mitigation obligations of shareholders with high shareholding ratios in banks,insufficient regulation on the behavior of small and medium shareholders of rural banks,lack of a macro legal environment that restricts the behavior of China’s bank shareholders,the upper limit of the shareholding ratio of rural bank’s natural person shareholders is set too high.In this regard,on the premise of not changing the basic content of the main sponsor system,this paper gives corresponding suggestions for improvement,and hoped that this will improve the implementation effect of the main sponsor system of rural banks,to help realize the value of the main sponsor system of rural banks,contributing to China’s development of inclusive finance services and the promote of The Rural Revitalization Strategy.