Due to institutional and policy reasons, there are huge non-performing loans in China's entire financial system. The huge amount of non-performing loans not only affects the stability of the banking system, but also weakens the supporting role of the banking industry in economic development, which makes the banking industry in China hide huge operational risks. With the gradual opening of the financial industry, China's banking industry is facing enormous competitive pressure. All commercial banks are striving to develop themselves in the market, but this does not automatically guarantee that the problem of non-performing loans in China's banking industry can be completely solved. Therefore, correctly handling the problem of non-performing loans of banks has become a top priority for maintaining China's economic security.

First, the current situation of non-performing loans of commercial banks in China

For a long time, 76% of non-performing loans in China's banking industry are concentrated in state-owned commercial banks. State-owned commercial banks have accounted for more than 30% of non-performing loans of other banks. It can be seen that the problem of non-performing loans of state-owned commercial banks is the main bottleneck that puzzles the reform and development of China's financial industry, especially the banking industry. Although the total amount and ratio of non-performing loans have shown a good trend of double decline in recent years, such high non-performing loans are still a very serious threat to the banking industry in China. Dealing with existing non-performing loans and controlling new non-performing loans will remain a long-term important task for Chinese banks, especially state-owned commercial banks.

Second, the causes of non-performing loans of commercial banks in China

The reasons for the formation of non-performing loans of financial enterprises are complicated. Generally speaking, it is mainly due to the poor management of banks themselves, and the causes of non-performing loans in China are different, including the following aspects:

(A) unreasonable government intervention

On the one hand, the state and local governments require enterprises and banks to obey the overall situation, issue loans and develop projects according to the state's intentions, bear social burdens and accept government management; On the other hand, enterprises and banks are required to operate in the market, pursue economic benefits and survive and develop themselves. The direct consequence of unreasonable government intervention is that the credit activities of state-owned commercial banks are distorted and the financial order is chaotic, which makes the bank's stock risks accumulate and the incremental risks are superimposed.

(2) the law is not perfect and the law enforcement is lax?

1. The laws and regulations are not perfect. On the one hand, giving creditor banks the right to participate in and supervise the handling of debt-related enterprises is not enough to achieve the purpose of participating in supervision; On the other hand, there is still a lack of corresponding legal provisions in some aspects of bank creditor's rights protection. At the same time, the lack of understanding of international financial field and international financial laws and regulations leads to the low level of credit risk management of commercial banks in China, let alone international integration and transnational risk management.

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2. Law enforcement is lax. In practice, first, local protectionism is widespread, and administrative interference in judicial justice occurs from time to time; Second, the phenomenon of non-compliance with laws and lax enforcement is prominent, which leads to the passive work of state-owned commercial banks in safeguarding rights according to law.

(3) blind investment by enterprises

Enterprises blindly expand investment regardless of their own operating conditions and affordability in business activities. In this case, a double negative effect of rolling is formed. Enterprises borrow money from banks through various relationships, and the lack of funds after investment forces banks to continue lending. If the bank stops increasing loans, the new project will not be put into production, which will lead to the failure to recover the previous loans. In addition, due to unscientific project construction and capital investment, the profitability and competitiveness of the project are seriously lacking, and even after completion, it is impossible to form a good solvency, which makes loans tend to increase on the one hand, and more loans become non-performing assets on the other.

(D) Lack of financial supervision

China's financial supervision focuses on compliance supervision and ignores risk supervision. The market sensitivity of compliance supervision is poor, and the measures often lag behind the development of the market and cannot prevent financial risks in time; China's financial supervision departments pay insufficient attention to the corporate governance structure and internal control of commercial banks, and are often busy with external supervision, especially the responsibilities of the management team and president of commercial banks are not clear enough, and they lack effective supervision over their performance; China's financial supervision departments mainly supervise commercial banks by on-site inspection. Supervisors passively complete the required statistical reports and inspections according to the requirements and instructions of superior leaders, making it difficult to conduct comprehensive, regular and preventive supervision of the entire banking industry. In China's financial supervision team, there are also many deficiencies in the quality of supervisors.

(5) The credit system is not perfect and the credit environment is not good.

The construction of China's credit system is still in its infancy, and the credit information system has not been horizontally networked with industry and commerce, taxation and other departments, and the payment information has not been included in the credit information system, so it is still impossible to grasp more comprehensive information of enterprises and individuals. Some enterprises, as legal persons or natural persons, have a weak sense of credit and are influenced by bad social atmosphere, and a large number of bank debts are evaded, resulting in banks being unable to recover debts.

Third, the solution of non-performing loans of commercial banks in China.

(1) Deepening the structural reform of commercial banks

We should speed up the system construction of modern commercial banks, establish a system with clear rights and responsibilities, and establish an effective risk prevention mechanism from the system. Introduce as many private investors and foreign strategic investors as possible, and eliminate administrative intervention and official intervention.

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Business style, in accordance with the rules of international counterparts, in order to establish a more standardized and scientific bank operation model, and build a modern commercial bank property rights system with clear property rights and separation of government from enterprise.

(B) improve the legal system

1. We will promptly establish and improve China's credit legislation system, severely punish acts of dishonesty in the credit market, provide a solid legal guarantee for standardizing credit operations, and effectively protect the creditor's rights of creditor banks. Completely change the long-standing legal defects in China's credit market.

2. Seriously implement the laws and regulations on non-performing loans of commercial banks. Some effective financial laws and regulations formulated by China's financial supervision departments will be gradually transformed into relatively stable legal system arrangements through legal procedures.

3. Strengthen the legal awareness of commercial bank loan personnel and enterprises. Banks should act in strict accordance with the law, resolutely resist improper or illegal loans, and strengthen internal audit and early warning of loan risks.

(C) improve the credit management mechanism

Improve the credit risk mechanism and establish risks.