Zhejiang Tailong Commercial Bank
Encyclopedia
Zhejiang Tailong Commercial Bank is a small Chinese commercial bank
in Taizhou, Zhejiang
province, China
. The bank
has a relatively short history. It is comparatively well known in China because of its intensive public relations work in context with the SME finance supported by the government. Is this context it was termed as the Chinese Grameen Bank
. This comparison is not accurate. Tailong Commerial Bank operates in one of the richest and economically most active regions in China and targets local business men and not women living below the poverty line like Grameen. Also Grameen bank and Tailong Commercial Bank use fundamentally different lending technologies. The most important difference is that the Chinese bank
is purely operating in the commercial mode and does not receive or provide any form of subsidize to or from anyone, because the bank
executives do not believe that they are a charity organization.
had a very humble beginning as a credit union
with an asset of only one million Renminbi
Yuan
and seven employees in two small rented rooms dated back on June 28, 1993. The bank
has since gradually expanded and today, it has a total of nine branches in addition to its headquarter and ranked number two behind Taizhou City Commercial Bank
among the biggest eleven local bank
s in the Luqiao Precinct
of Taizhou, Zhejiang
, with 21.9% of total local deposits, and 20.27% of total local loans by the end of 2006. On August 15, 2006, the status of the bank
was upgraded from credit union
to commercial bank
, and thus was accordingly renamed as Zhejiang Tailong Commercial Bank (浙江泰隆商业银行) from its original name Taizhou City Tailong Urban Credit Union (台州市泰隆城市信用社).
Although the credit union
was performing adequately in the first half decade since its birth, it was struggling in the fiercely competitive Chinese market. As a result the bank focusses its market strategy on small and mid-sized business.
Since its incept, the bank
has provided over 60 billion CNY
(around $
8 billion) to its clientele, and over 90% of which are peasants. For its loans made to microbusiness which averages 51,000 CNY
(around $
6,400), over 90% of the customers are peasants turned entrepreneurs. One of the practice of the bank copied from its larger rival Taizhou City Commercial Bank
is that the bank must adjust its opening hour to that of its client. For example, if a client is vendor close at 9:00 pm, then the bank
must not close at anytime earlier than 9:00 pm because the vendor may need to go to the bank
after she/he closes.
has focused on SME loans up to a size of RMB 5 million. Over 90% of loans made is less than one million CNY
(around $
125,000.
Since its clientele often lacks the assets required by larger bank
s when applying for a loan, the Zhejiang Tailong Commercial Bank developed a method similar to the American immigration system: sponsorship. Lending decisions are not primarily based on assets, but on third party (guarantor) and other soft information.
The number of loan officers is more than one third of the total staff, due to the labor intensive nature of SME business.
In addition to the work of loan officers, the banks also institute a strict policy of not making any new loans to customers who still have not completely paid back an earlier loan. As a result of these measures, the non-performing loan
s of the bank
has never exceeded 0.9%, and mostly are kept at less than 0.83% range.
Commercial bank
After the implementation of the Glass–Steagall Act, the U.S. Congress required that banks engage only in banking activities, whereas investment banks were limited to capital market activities. As the two no longer have to be under separate ownership under U.S...
in Taizhou, Zhejiang
Taizhou, Zhejiang
Taizhou is a prefecture-level city in middle eastern Zhejiang province, People's Republic of China...
province, China
China
Chinese civilization may refer to:* China for more general discussion of the country.* Chinese culture* Greater China, the transnational community of ethnic Chinese.* History of China* Sinosphere, the area historically affected by Chinese culture...
. The bank
Bank
A bank is a financial institution that serves as a financial intermediary. The term "bank" may refer to one of several related types of entities:...
has a relatively short history. It is comparatively well known in China because of its intensive public relations work in context with the SME finance supported by the government. Is this context it was termed as the Chinese Grameen Bank
Grameen Bank
The Grameen Bank is a microfinance organization and community development bank started in Bangladesh that makes small loans to the impoverished without requiring collateral...
. This comparison is not accurate. Tailong Commerial Bank operates in one of the richest and economically most active regions in China and targets local business men and not women living below the poverty line like Grameen. Also Grameen bank and Tailong Commercial Bank use fundamentally different lending technologies. The most important difference is that the Chinese bank
Bank
A bank is a financial institution that serves as a financial intermediary. The term "bank" may refer to one of several related types of entities:...
is purely operating in the commercial mode and does not receive or provide any form of subsidize to or from anyone, because the bank
Bank
A bank is a financial institution that serves as a financial intermediary. The term "bank" may refer to one of several related types of entities:...
executives do not believe that they are a charity organization.
History
the bank was established in 1993. The bankBank
A bank is a financial institution that serves as a financial intermediary. The term "bank" may refer to one of several related types of entities:...
had a very humble beginning as a credit union
Credit union
A credit union is a cooperative financial institution that is owned and controlled by its members and operated for the purpose of promoting thrift, providing credit at competitive rates, and providing other financial services to its members...
with an asset of only one million Renminbi
Renminbi
The Renminbi is the official currency of the People's Republic of China . Renminbi is legal tender in mainland China, but not in Hong Kong or Macau. It is issued by the People's Bank of China, the monetary authority of the PRC...
Yuan
Chinese yuan
The yuan is the base unit of a number of modern Chinese currencies. The yuan is the primary unit of account of the Renminbi.A yuán is also known colloquially as a kuài . One yuán is divided into 10 jiǎo or colloquially máo...
and seven employees in two small rented rooms dated back on June 28, 1993. The bank
Bank
A bank is a financial institution that serves as a financial intermediary. The term "bank" may refer to one of several related types of entities:...
has since gradually expanded and today, it has a total of nine branches in addition to its headquarter and ranked number two behind Taizhou City Commercial Bank
Taizhou City Commercial Bank
Bank of Taizhou is a city commercial bank headquartered in Taizhou, Zhejiang Province - China. On 9th September, 2010, it was officially renamed as Bank of Taizhou from the original name of Taizhou City Commercial BankBank of Taizhou (TZB; simplified Chinese 台州银行) is a city commercial bank...
among the biggest eleven local bank
Bank
A bank is a financial institution that serves as a financial intermediary. The term "bank" may refer to one of several related types of entities:...
s in the Luqiao Precinct
Precinct
A precinct is a space enclosed by the walls or other boundaries of a particular place or building, or by an arbitrary and imaginary line drawn around it. The term has several different uses...
of Taizhou, Zhejiang
Taizhou, Zhejiang
Taizhou is a prefecture-level city in middle eastern Zhejiang province, People's Republic of China...
, with 21.9% of total local deposits, and 20.27% of total local loans by the end of 2006. On August 15, 2006, the status of the bank
Bank
A bank is a financial institution that serves as a financial intermediary. The term "bank" may refer to one of several related types of entities:...
was upgraded from credit union
Credit union
A credit union is a cooperative financial institution that is owned and controlled by its members and operated for the purpose of promoting thrift, providing credit at competitive rates, and providing other financial services to its members...
to commercial bank
Commercial bank
After the implementation of the Glass–Steagall Act, the U.S. Congress required that banks engage only in banking activities, whereas investment banks were limited to capital market activities. As the two no longer have to be under separate ownership under U.S...
, and thus was accordingly renamed as Zhejiang Tailong Commercial Bank (浙江泰隆商业银行) from its original name Taizhou City Tailong Urban Credit Union (台州市泰隆城市信用社).
Although the credit union
Credit union
A credit union is a cooperative financial institution that is owned and controlled by its members and operated for the purpose of promoting thrift, providing credit at competitive rates, and providing other financial services to its members...
was performing adequately in the first half decade since its birth, it was struggling in the fiercely competitive Chinese market. As a result the bank focusses its market strategy on small and mid-sized business.
Since its incept, the bank
Bank
A bank is a financial institution that serves as a financial intermediary. The term "bank" may refer to one of several related types of entities:...
has provided over 60 billion CNY
Renminbi
The Renminbi is the official currency of the People's Republic of China . Renminbi is legal tender in mainland China, but not in Hong Kong or Macau. It is issued by the People's Bank of China, the monetary authority of the PRC...
(around $
United States dollar
The United States dollar , also referred to as the American dollar, is the official currency of the United States of America. It is divided into 100 smaller units called cents or pennies....
8 billion) to its clientele, and over 90% of which are peasants. For its loans made to microbusiness which averages 51,000 CNY
Renminbi
The Renminbi is the official currency of the People's Republic of China . Renminbi is legal tender in mainland China, but not in Hong Kong or Macau. It is issued by the People's Bank of China, the monetary authority of the PRC...
(around $
United States dollar
The United States dollar , also referred to as the American dollar, is the official currency of the United States of America. It is divided into 100 smaller units called cents or pennies....
6,400), over 90% of the customers are peasants turned entrepreneurs. One of the practice of the bank copied from its larger rival Taizhou City Commercial Bank
Taizhou City Commercial Bank
Bank of Taizhou is a city commercial bank headquartered in Taizhou, Zhejiang Province - China. On 9th September, 2010, it was officially renamed as Bank of Taizhou from the original name of Taizhou City Commercial BankBank of Taizhou (TZB; simplified Chinese 台州银行) is a city commercial bank...
is that the bank must adjust its opening hour to that of its client. For example, if a client is vendor close at 9:00 pm, then the bank
Bank
A bank is a financial institution that serves as a financial intermediary. The term "bank" may refer to one of several related types of entities:...
must not close at anytime earlier than 9:00 pm because the vendor may need to go to the bank
Bank
A bank is a financial institution that serves as a financial intermediary. The term "bank" may refer to one of several related types of entities:...
after she/he closes.
Business
The bankBank
A bank is a financial institution that serves as a financial intermediary. The term "bank" may refer to one of several related types of entities:...
has focused on SME loans up to a size of RMB 5 million. Over 90% of loans made is less than one million CNY
Renminbi
The Renminbi is the official currency of the People's Republic of China . Renminbi is legal tender in mainland China, but not in Hong Kong or Macau. It is issued by the People's Bank of China, the monetary authority of the PRC...
(around $
United States dollar
The United States dollar , also referred to as the American dollar, is the official currency of the United States of America. It is divided into 100 smaller units called cents or pennies....
125,000.
Since its clientele often lacks the assets required by larger bank
Bank
A bank is a financial institution that serves as a financial intermediary. The term "bank" may refer to one of several related types of entities:...
s when applying for a loan, the Zhejiang Tailong Commercial Bank developed a method similar to the American immigration system: sponsorship. Lending decisions are not primarily based on assets, but on third party (guarantor) and other soft information.
The number of loan officers is more than one third of the total staff, due to the labor intensive nature of SME business.
In addition to the work of loan officers, the banks also institute a strict policy of not making any new loans to customers who still have not completely paid back an earlier loan. As a result of these measures, the non-performing loan
Non-performing loan
A Non-performing loan is a loan that is in default or close to being in default. Many loans become non-performing after being in default for 3 months, but this can depend on the contract terms....
s of the bank
Bank
A bank is a financial institution that serves as a financial intermediary. The term "bank" may refer to one of several related types of entities:...
has never exceeded 0.9%, and mostly are kept at less than 0.83% range.