According to the decision of the State Council, the People's Bank of China closed down and dissolved China Agricultural Development Trust and Investment Company (CADTIC) on June 4th, 1997. This case can well illustrate the risk and management of China Trust and Investment Company.

China Agricultural Credit Company was established with the approval of the State Council on 1988. Its shareholders are the Ministry of Finance, state-owned banks and large state-owned enterprises with a registered capital of 500 million yuan. 1991June was directly under the State Planning Commission, and19931October was under the Ministry of Agriculture. By the end of 1996, China Rural Credit Cooperatives had 362 branches in 22 provinces and cities, including 47 financial branches (19 provincial and municipal offices, 17 securities business department, 1 urban credit cooperatives), 3 enterprises and 5 real estate companies.

The company has been operating illegally for a long time, blindly expanding its assets, and its internal management is chaotic. By the end of June, 1996, 1 1 had lost more than 5 billion yuan, and 122 billion debt could not be repaid. The company should have declared bankruptcy, but in view of its huge debts and wide coverage, in order to reduce social shock, the central bank closed it down and dissolved it, and decided to entrust the company to China Construction Bank to repay the debts of China Rural Credit Company. The serious problems existing in the management of rural credit cooperatives in China are mainly reflected in the following four aspects:

First, there are many branches at home and abroad, and the risks cannot be controlled. China Rural Credit Cooperative has seven levels from the headquarters to the bottom. Only three first-level branches, namely Guangdong Office, Dalian Office and Foreign Trade Company, have invested in 46 companies with independent legal personality. The headquarters of Zhejiang Office in the United States, Hong Kong, Russia, Croatia, Bosnia and Herzegovina and Albania are unknown. The company headquartered in Hong Kong has set up 38 branches in the Mainland. There are so many overlapping branches at different levels, the management is chaotic, and most branches are losing money.

Second, financial business is authorized at different levels, and financial and industrial operations are mixed, blindly expanding assets. Since 199 1, the company has authorized by engraving and issuing special seals for financial business, enabling subordinate companies to operate financial business, with more than 50 special seals for financial business. Many branches absorb deposits, loans, investments or use them for their own purposes. As a result, the company's total assets expanded rapidly, reaching 9 billion yuan at the end of 1993 and 32 billion yuan at the end of 1995.

Third, the management is chaotic and seriously out of control. There are no formalities for investment loans, many of which are decided by individuals, and some even have no contracts or agreements. There is no unified standard for accounting and financial management in the company, which is very confusing. In the past six years, Guangdong Office has changed five treasurers, and its subordinate institutions have 79 off-balance-sheet accounts.

Fourth, the quality of assets is extremely poor, and investment losses. Non-performing assets of corporate loans are 60%; The company's external equity investment is 132, the amount is about 1 100 million yuan, and the return on investment is only 1.47%. Some investment units have gone bankrupt or are insolvent. China Rural Credit Cooperative invested 2 19 real estate projects in19 provinces with a capital of 5.3 billion yuan. Most projects have no income and the principal cannot be recovered.