Xiang Junbo: Enhancing the social responsibility of the banking system
in China
Remarks by Mr Xiang Junbo, Deputy Governor of the People's Bank of China, at the
Inauguration Ceremony of National Student Loans Extended to Students in Gansu Province,
Gansu, 22 May 2007.
* * *
It is of great significance to hold the inauguration ceremony of National Student Loans (NSL)
today at Huining county which has glorious revolutionary tradition in Gansu province. I would
like to express my warm congratulations on the inauguration of the program in Gansu
province on behalf of the headquarters of the People's Bank of China (PBC). I would also like
to take this opportunity to extend our sincere greetings to all the staff working in the banking
sector of Gansu province and all those who have made great contributions to the work of
student loans.
NSL policy is a great measure to enhance the support to students who have financial
difficulties, an important content of building socialist harmonious society and a new attempt
of supporting education by the financial sector under the socialist market economy to
improve financial support to students in universities. The work of NSL relates to the benefit of
many students and their parents, to the overall situation of state talent cultivation and to the
stability of universities and society. Good performance of NSL is the requirement of the
Communist Party of China (CPC) Central Committee and State Council, and is the social
responsibility of banking system as well.
From 1999, under the leadership of the Communist Party of China (CPC) Central Committee
and State Council, the PBC has studied and designed NSL policy with relevant agencies,
improved its system constantly in practice, and positively pushed forward the work of it.
Particularly in 2004, we made some adjustment and improvement of NSL policy, including
the establishment of risk compensation and market operation regimes to enable risk sharing
among the fiscal sector, universities and the banks; the establishment of NSL management
centers both at the state and provincial (autonomous regions and municipalities directly
under the Central Government) levels to increase the administration responsibilities of
education authority and reduce the loan-post cost and risk of the banks; the adjustment of
interest subsidy and repayment policies, and extension of loan repayment period. All these
adjustment and improvement have sufficiently showed great importance attached to the
education and the work of NSL from the government, and sufficiently respected the principle
of reciprocity between duties and rights. It is beneficial to the healthy and sustainable
development of NSL. Under the joint efforts of the financial sector and relevant agencies, the
business of NSL has made much progress. The balance of NSL reached 15.37 billion yuan
by the end of March 2007, compared to only above 4 million at the end of 1999. Almost 2
million students have benefited from the program.
At the same time, in order to further carry out key policies of promoting the construction of
New Socialist Countryside and Harmonious Society, the PBC actively guided financial
institutions to study further the business of student loans, increased financial product
innovation, and actively explored and developed new pattern and types of student loans
consistent with financial business practice with easier access to students from poor families.
On 30 August 2006, the PBC issued Notice on Further Strengthening the Work of Student
Loan Business, to guide the financial sector to actively extend loans to local students while
carrying out the work of NSL. By March of 2007, 24 provinces (cities) nationwide have
carried out the student loan business for local students, 13 provinces and cities have issued
regulations on loan extended to local students, 11 provinces have provided interest subsidy
by local fiscal agencies, and 6 provinces have put forward measures of risk compensation.
All in all, the business of local student loans has developed from nowhere to grow steadily.
By the end of March 2007, the balance of student loans, which include the loans extended to
local students, a valuable supplement to NSL and an important component of financial
support from the banking system to students with financial difficulties, has reached 3.43
billion yuan.
This time, Gansu province has studied and established the Provisional Measures on National
Student Loans for Students from Gansu Province, combining the policy measures of NSL
together with the loan business for local students. These measures have positive
implications in terms of project design, enabling adequate financing for fiscal interest subsidy
and risk compensation of student loans under difficult fiscal situation, thus providing
incentives for financial institutions to engage in local student loan business, a breakthrough
in the building of a long lasting mechanism of local student loans. This sufficiently shows the
great importance and determination attached by provincial Party Committee and government
to the work of local student loan business. The pattern of combining NSL policy with local
student loan business by Gansu Province is a pioneering innovation and valuable attempt to
the expansion of student loan business. It is beneficial to the healthy development and
effective enforcement of student loan business, helpful to address the issue of supporting
students from poor families to attend school, and it can provoke more thoughts and even
serve as a reference for further enforcement and improvement of the NSL policy.
To enforce and further improve the NSL policy is a target clearly specified at the sixth plenary
session of the 16th CPC Central Committee and in this year's government work report. In the
light of NSL policies and measures, further development of local student loans is an
important step for the enforcement and improvement of NSL, an important component to
establish and strengthen financial support system to students with financial difficulties, and
also reflects the trend and future path for development of student loan business. I hope the
PBC Lanzhou sub-branch can take it as a good opportunity to carry out the work of student
loans, further strengthen communication and coordination with the educational and fiscal
authorities, enhance research and investigation, sum up experience and lessons in time,
improve continuously institutional building and risk prevention mechanisms, so as to
establish step by step a systematic and complete policy system of local student loans, and
explore a long-lasting system of local student loans, for the benefits of students and families
with financial difficulties in Gansu province. Valuable theoretical explorations and practical
experiences should be studied to help relevant government agencies design relevant policies
aimed to promote local student loans in the whole country.
As a final note, I wish a healthy development of the financial sector in Gansu province and
greater achievement of student loan work!