What are policy banks?

Policy lenders (non-commercial banks) are initiated and funded by the government to implement and cooperate with the government’s specific economic policies and intentions. and institutions that conduct financing and credit activities.

Policy banks are not for the purpose of profit. They are specifically engaged in policy financing activities, directly or indirectly, in specific business fields to implement and cooperate with the government's social and economic policies or intentions, and serve as the government's economic and social development bank. Promote social progress and carry out macroeconomic management tools.

In 1994, the Chinese government established three major policy banks: the China Development Bank, the Export-Import Bank of China, and the Agricultural Development Bank of China, all of which are directly under the leadership of the State Council.

Chinese name: policy bank

Foreign name: policy lender/non-commercial bank

Characteristics: Government-owned

Function : State intervention and economic coordination

Main institutions: China Development Bank, Export-Import Bank of China, Agricultural Development Bank of China

Development history

After the founding of New China, The country carried out a comprehensive rectification of banks during the Republic of China. The People's Bank of China absorbed and merged most of the domestic banks, integrating the central bank and commercial banks into one, becoming the only bank in mainland China. At that time, the People's Bank of China was mainly responsible for policy-related business.

After the reform and opening up in 1978, the country took a number of measures to diversify the development of the domestic banking industry, including:

(1) Restored China Construction Bank, China Agricultural Bank of China Bank, Bank of China;

(2) The Industrial and Commercial Bank of China and the Bank of Communications were newly established;

(3) Banking licenses were issued to the governments of Shenzhen, Guangdong, Fujian and Shanghai , the local government sponsored the establishment of Shenzhen Development Bank (1987), Guangdong Development Bank (1988), Industrial Bank (1988), Shanghai Pudong Development Bank (1992);

(4) To China Merchants Group, CITIC Four state-owned enterprises, China Everbright Group and Shougang Group, issued banking licenses and opened China Merchants Bank (1987), CITIC Industrial Bank (1987), China Everbright Bank (1992), and Hua Xia Bank (1992); breaking the trend of banks being founded by the government monopoly situation.

From 1978 to 1994, the country’s policy businesses were mainly undertaken by Industrial and Commercial Bank of China, Agricultural Bank of China, Bank of China and China Construction Bank.

On December 25, 1993, the State Council issued the "Decision of the State Council on the Reform of the Financial System" (hereinafter referred to as the "Decision") and other documents, proposing to deepen financial reform and build the four major banks of China Industrial and Peasant Bank into To this end, large state-owned commercial banks have separated policy businesses from the four major banks and established specialized banks specifically responsible for policy businesses, namely policy banks. This document became the main legal document for the preparation of the policy bank. From then on, the four major industrial and agricultural banks, China Construction Bank, were transformed from professional banks into state-owned commercial banks and no longer undertake policy financial services.

On March 17, 1994, the China Development Bank was established in Beijing with a registered capital of 50 billion yuan, mainly responsible for domestic development policy financial services.

On July 1, 1994, the Export-Import Bank of China was established in Beijing with a registered capital of 3.3 billion yuan. It is mainly responsible for the import and export financing business of large electromechanical equipment.

On November 8, 1994, the Agricultural Development Bank of China was established in Beijing with a registered capital of 20 billion yuan, mainly responsible for agricultural policy support business.

The China Development Bank, the Export-Import Bank of China, and the Agricultural Development Bank of China are all directly under the leadership of the State Council.

In 2007, Central Huijin and the China Development Bank signed an agreement in Beijing on December 31 to inject US$20 billion into the China Development Bank.

In February 2008, the State Council approved the overall reform implementation plan of the National Development Bank.

On December 16, 2008, China Development Bank Co., Ltd. was established in Beijing on the 16th, becoming the first commercial bank transformed from a policy bank, marking a major achievement in the reform of my country's policy banks. progress.

At present, the China Banking Regulatory Commission includes the Export-Import Bank of China and the Agricultural Development Bank of China as policy banks in its statistical caliber, and the China Development Bank and policy banks are included in the statistics.

Purpose

1. Supplement and improve the market financing mechanism. The financing objects of policy banks are generally limited to those banks or projects that are needed for social development but commercial financial institutions are unwilling to provide funds. Therefore, they can supplement the shortcomings of commercial financing and improve the functions of the financial system.

2. Inducing and containing the flow of commercial funds. First, policy banks indicate the direction and focus of national economic policy to commercial financial institutions through their own advance investment behavior, thereby eliminating the doubts of commercial financial institutions and driving commercial capital participation; second, policy banks provide commercial financial institutions with Low-interest or subsidized loans can partially make up for the lack of low and unguaranteed project investment profits, thus attracting the participation of commercial funds; third, policy banks can open bottlenecks or open up new areas of economic development by investing in basic banks or emerging industries. New markets spur the follow-up of commercial funds.

3. Provide professional financial services. Policy banks generally provide financial services for specific industries or fields. They are highly professional, have accumulated rich practical experience and professional skills, and have gathered a large number of technical personnel who are proficient in business, and can provide professional financial services in these fields. Serve.

The main purpose of establishing the China Development Bank is to, on the one hand, provide financing for key national construction projects and ensure the smooth progress of key construction projects related to the overall national economy and social development; on the other hand, to consolidate the national investment funds that were decentralized at the time. Centralize efforts to establish an investment loan review system, give development banks certain investment and loan decision-making powers, and require them to assume corresponding responsibilities and risks to prevent blind investment and duplication of construction.

Characteristics

Policy banks are different from the government’s central bank and other commercial banks. Its important role is to make up for the shortcomings of commercial banks in fund allocation, thereby improving the Optimize the overall function of a country’s financial system. Compared with other banks, policy banks have the following characteristics:

First, from the perspective of the nature of capital, policy banks are generally established with government financial appropriations or government participation, are controlled by the government, and maintain relationships with the government. closely related. For example, Germany (Bank for Reconstruction and Development Law) stipulates that the Bank for Reconstruction and Development is owned by the government, of which the federal government holds 80% of the shares and the state governments hold 20% of the shares. France's Banque d'European and Foreign Trade is composed of the French Central Bank holding 24.5% of the shares, the Trust and Savings Bank holding 24.5% of the shares, and investments from other large commercial banks.

Second, from the perspective of business purposes, policy banks do not aim at making profits, but take the implementation of the country's social and economic policies as their own responsibility. Its main function is to provide financing for national key construction and the development of industries and regions supported by national industrial policies. Generally include loans to support agricultural development, loans for the acquisition of agricultural and sideline products, loans for transportation, energy and other infrastructure and basic industries, loans for import and export trade, etc. However, not aiming to make profits does not mean that policy banks are not profitable or that they ignore efficiency. It only means that from the perspective of business goals, they do not pursue profits or profit maximization.

Third, from the perspective of business scope, policy banks cannot absorb demand deposits and public deposits. The main sources of funds are capital provided by the government, various borrowed funds and funds raised by issuing policy financial bonds. , most of its funds are long-term loans and capital loans. Deposits of policy bank income are not used for transfers. Loans are generally earmarked and will not be directly converted into savings deposits and time deposits. Therefore, it will not have deposit and credit creation functions like commercial banks. Policy banks have their own specific service areas and do not compete with commercial banks.

It generally serves those project fields that are of great significance to the development of the national economy and social stability, and have large investment scales, long cycles, low economic benefits, and slow capital recovery, such as agricultural development, important infrastructure construction, import and export trade, and small and medium-sized enterprises. , economic and technological development and other fields.

Fourth, from the perspective of financing principles, policy banks have their own special financing principles. In terms of financing conditions or qualifications, it is required that the financing object must be difficult to obtain the required financing from other financial institutions before it is qualified to obtain funds from policy banks, and all provided are medium and long-term credit funds, loans The interest rate is significantly lower than the interest rate of similar loans from commercial banks in the same period, and some are even lower than the financing cost, but the principal and interest are required to be repaid on schedule.

Fifth, from the perspective of credit creation ability, policy banks generally do not participate in the credit creation process, and their ability to derive funds is weak. Because the main source of funds for policy banks is not deposits, but often provided by the government, and the loans of policy banks are mainly earmarked, which will not increase the money supply under normal circumstances.