Wang Junjin as a Deputy to NPC and CPPCC for Political Deliberation

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Chairman of JuneYao Group: Encourage Private Enterprises to Invest in Financial Institutions and Establish Deposit Insurance System
ReleaseDate: 2013-11-26

[Media Report]

Excerpt from First Financial Daily on March 7, 2013

Our journalist learned from NPC deputy and JuneYao Group Chairman Wang Junjin on March 7 that relevant proposals submitted during the CPC and NPPCC advised China to vigorously develop private financial institutions and establish “deposit insurance system” to prevent potential risks.

Wang Junjin pointed out now financial institutions in China are still dominated by state-owned assets and foreign capital, with limitations on private capital at key links such as equity ratio. Take the initiator of village banks for an example, now it is not explicitly stated that private capital is allowed to initiate and control shares of a village bank in a legal person capacity. The main reason is that the central bank and local governments generally bear the responsibility of paying off individual debts when a financial institution with poor operation withdraws from market for a long time. This model of recessive deposit insurance system brings heavy burdens on finances at all levels and results in distorted objectives of monetary policy of the central bank.

Wang Junjin proposed to lift the control over equity ratio, establish “deposit insurance system”, accelerate the development of private financial institutions and carry out pilot project in Shanghai and other eligible areas. The government may establish a deposit insurance institution with independent legal status in line with law which may be defined as a policy financial institution directly under the State Council. Deposit insurance fund may be set up with main fiscal appropriations from the government and proportional contributions by the central bank and banking institutions and branches may be established in various places. All eligible banks as insurance subjects are required to participate in the deposit insurance under the national deposit insurance fund.

“The purposes of the deposit insurance system are to supervise commercial banks to constantly improve their internal control ability and overall level of risk prevention, timely prevent and restrain potential risks of private institutions with poor operation by means of differentiated rates of deposit insurance system, early rectification and other risk control mechanisms and establish a private financial institutions system characterized by orderly competition, high-efficiency service and sustainable development by timely disposing high-risk private financial institutions,” expressed Wang Junjin.