Shanxi to pilot micro-loan warranty insurance

Shanxi will pilot a micro-loan warranty insurance mechanism, to allow small and micro enterprises (SMEs) and individually-owned businesses to get loans without any collateral, according to the province’s insurance regulatory commission on Sept 12.

In addition to Shanxi’s bureau of insurance regulatory, three other authorities, including Shanxi Department of Finance and Shanxi Office of China Banking Regulatory Commission jointly released an official file on this insurance’s pilot works. Banks and insurance companies will share responsibility for loan risks in a fixed proportion, the file suggested.

Moreover,Shanxi will establish supporting mechanisms to guarantee insurance, including accountability mechanisms, punishments for dishonesty and information exchanges between banks and insurance companies.

Authorities are studying risk compensation measures, a provincial official said, adding that they encourage capable cities to pilot this insurance by setting up risk compensation funds.