Some small and medium-sized banks have paid a price for their improper collection of deposits. Recently, some small and medium-sized banks have been fined millions of yuan for improper collection of deposits such as rebate deposits, and the relevant responsible persons of the banks have also been warned. Data shows that since the beginning of this year, regulatory authorities have issued about 20 fines for such illegal deposit taking behavior. Behind each fine, it reflects the chaos of small and medium-sized banks in collecting deposits, but at the same time, it reminds banks not to cross the compliance red line when collecting deposits.
The so-called rebate deposit taking refers to the behavior of banks providing additional benefits to depositors, such as cash refunds, doubling points, or giving away physical gifts, to attract deposits. Its essence is to indirectly increase depositors' income. Rebate deposit taking has allowed some banks to taste the sweetness of rapidly expanding their deposit scale in a short period of time, but in fact, it has also planted hidden dangers for the irrational rise of excessively high debt costs.
The deposit size is the foundation of bank lending. Compared to large banks, small and medium-sized banks are inherently weaker in terms of deposit size and brand appeal. In order to compete for customers and seize the market, some banks resort to various improper deposit taking behaviors such as interest subsidies to increase depositors' income. Against the backdrop of low interest rates and "deposit relocation", residents are keen to shift their deposits to higher yielding asset management products such as wealth management, funds, and insurance, further intensifying the competition for small and medium-sized banks to attract deposits through savings diversion. Some small and medium-sized banks would rather be fined than take shortcuts to illegally solicit deposits in order to enhance their lending capacity. However, this behavior has raised the cost of funds for banks and hidden many risks. With the decline in loan interest rates and the decrease in loan yields, the savings obtained at high costs further exacerbate the narrowing of interest spreads, causing banks to be trapped in a vicious cycle of "illegal hoarding - pushing up costs - amplifying risks".
The financial regulatory authorities have repeatedly issued orders to strictly prohibit commercial banks from illegally soliciting deposits. The Measures for the Quality Management of Liabilities of Commercial Banks clearly stipulate that commercial banks should strictly implement the relevant regulations on deposit interest rates, interest calculation and settlement management, and regulate deposit taking behavior. They shall not adopt illegal means such as rebate deposit taking, third-party intermediary deposit taking, delayed payment deposit taking, loan to deposit deposit transfer deposit taking, and early withdrawal of interest based on archives to absorb and inflate deposits. Without a doubt, rebate deposits exceed the compliance red line and disrupt competition in the deposit market. Faced with the temptation of rebate deposits, price sensitive depositors will try their best to deposit their funds in the same bank. But this type of fund has poor stability, and once interest rates decrease, depositors quickly transfer their money, which invisibly poses a hidden danger to bank operations and financial market security. Currently, this "fancy" approach to attracting deposits has weakened the effectiveness of the market-oriented adjustment mechanism for deposit interest rates. From the perspective of maintaining financial market stability, increasing the punishment for individual banks that do not follow the rules has become inevitable.
Strong regulation and risk prevention are the bottom line requirements for promoting the stable operation of small and medium-sized banks, filling in their shortcomings, and thus guarding against systemic financial risks. The regulatory authorities impose fines on banks that violate laws and regulations, aiming to promote rational participation of banking institutions in market competition, shift from relying on deposit loan interest rate differentials to improving comprehensive financial services, and achieve the effect of attracting customers and accumulating funds.
Banks should take this as a warning and quickly abandon their obsession with attracting deposits and optimize their debt costs. On the one hand, small and medium-sized banks need to reduce their dependence on high cost general deposits and vigorously expand low-cost stable funding sources such as settlement type current deposits and payroll services; On the other hand, it is necessary to strengthen the internal fund transfer pricing mechanism, adjust the interest calculation method in compliance, strictly control the expansion of high cost liabilities, and ensure that the cost of liabilities matches the asset yield. Small and medium-sized banks' interest rate competition is not conducive to long-term development. Controlling costs, improving efficiency, and strengthening services are the fundamental ways to maintain sustainable development. (Source: Economic Daily, Author: Wang Baohui)
(Editor in charge: Nian Wei)
