Insta
Small Private Businesses The Future Of China’s Growth? Lenders Focus On The Sector; Jack Ma Offers 3-Minute-Loans
Swarajya Staff
Jul 29, 2019, 11:36 AM | Updated 11:36 AM IST
Save & read from anywhere!
Bookmark stories for easy access on any device or the Swarajya app.
Alibaba co-founder and executive chair, billionaire Jack Ma’s MYbank has come out with a three-minute loan for small and medium businesses (SMB) in China, reports PYMNTS.com.
The bank uses real time payment data and a risk management system that analyses 3,000 variables before sanctioning a loan to a borrower. Latter can apply for a loan through their smartphones and receive the cash almost instantly if approved. The whole process takes around three minutes.
Non-state firms — mostly small businesses — make up about 60 percent of growth and employ 80 percent of workers in China. With the three-minute-loans, Ma is targeting these small businesses, while others are also focusing on the sector, a positive sign for Chinese economy which is facing a decreasing growth rate.
The nation’s second-largest lender launched a mobile app in September that can process loan applications for as much as 5 million yuan ($727,000) in two minutes, while Construction Bank increased its small-business lending by 51 percent last year, more than twice as fast as the industry, with defaults at just 0.3 percent. And units of Tencent Holdings and Ping An Insurance Group are both offering services similar to MYbank.
Small and medium enterprises are really the boiler room of the economy,” said Keith Pogson, a senior partner in charge of banking and capital markets at Ernst & Young LLP in Hong Kong, according to Bloomberg.
“It used to be a segment that banks thought was too difficult and too risky. But now they run their model and work out what the risks are so they feel more comfortable,” he added.
So far, the four-year-old MYbank has lent 2 trillion yuan ($290 billion) to nearly 16 million small companies, with a default rate of only about 1 percent.
Save & read from anywhere!
Bookmark stories for easy access on any device or the Swarajya app.
Support Swarajya's 50 Ground Reports Project & Sponsor A Story
Every general election Swarajya does a 50 ground reports project.
Aimed only at serious readers and those who appreciate the nuances of political undercurrents, the project provides a sense of India's electoral landscape. As you know, these reports are produced after considerable investment of travel, time and effort on the ground.
This time too we've kicked off the project in style and have covered over 30 constituencies already. If you're someone who appreciates such work and have enjoyed our coverage please consider sponsoring a ground report for just Rs 2999 to Rs 19,999 - it goes a long way in helping us produce more quality reportage.
You can also back this project by becoming a subscriber for as little as Rs 999 - so do click on this links and choose a plan that suits you and back us.
Click below to contribute.