The Beijing City Commercial Bank will launch a guarantee-free 30 million yuan (US$3.6 million) consumer credit for teachers starting from the Teacher's Day which falls on September 10 to buy durable goods, the Beijing Commercial Committee announced Wednesday.
The trial program will be conducted from September 10 to October 10 and will be provided for teachers to buy durable goods in Beijing's Xidan Shopping Centre and Cuiwei Mansion.
By simply presenting their identity cards, each teacher can borrow as high as 10,000 yuan (US$1,205), said Yan Xiaoyan, vice-president of the Beijing City Commercial Bank. The loan term can be as long as two years.
The coverage will be gradually extended to every Beijing resident, but Yan did not give the timetable.
This is the first time banks in Beijing have offered loans without guarantee. The attempt will simplify the credit applying process. Moreover, it will help expand domestic demand, said an expert from the State Internal Trade Bureau.
By July, the Beijing City Commercial Bank had granted 3.55 million yuan (US$427,700) in durable goods loans and 1.2 billion yuan (US$144.5 million) in various consumer credit services such as housing, automobile and home improvement.
Outstanding consumer credit loans by China's commercial banks reached 250 billion yuan (US$30.1 billion) in the first six months of this year, an increase of 107.1 billion yuan (US$12.9 billion) from the level in January, according to figures from the People's Bank of China.
However, the consumer credit business accounted for less than 3 percent of the total, compared with about 30 percent in Western countries.
Residents are unwilling to borrow money from banks because of long-waiting process in consumer credit offerings.
Insiders said it usually requires several months to process a consumer loan application.
Commercial banks usually require mortgages or third-party guarantees from applicants, giving rise to bigger hindrances.
Experts said a comprehensive individual credibility information system should be established to solve the problem.
A personal credit system has already been established in Shanghai. Commercial banks can check a borrower's credit report to know about his credit information collected from 15 local banks, courts and public security departments.
(China Daily)
