Capital lending, also known as capital lending, refers to short-term capital lending activities between banks and other financial institutions to adjust the surplus and deficiency of temporary funds. The amount, interest rate and term of the loan shall be determined by both parties through consultation according to the supply and demand of market funds. The amount and source of deposits absorbed by banks are different, and the objects and purposes of loans are different, resulting in different time, region and quantity of funds. This is the realistic possibility of interbank borrowing, and it is the objective need for interbank borrowing to adjust the surplus and deficiency of funds and make full and effective use of funds.
This way is to help the latter solve the temporary shortage of funds, and the borrower needs to repay the funds on time within the agreed time limit. Borrowed funds can be a lump sum or a small sum, and may also involve securities as collateral. The loan period is usually short, ranging from several hours to several days, depending on the market supply and demand of funds and the agreement between the two parties. In China, although it is not a long time to carry out capital lending, it is mainly carried out by financial institutions in the same industry.
Principles of borrowing funds
1. Interbank participation principle: As a market for capital borrowing, we must first adhere to the principle of financial interbank participation, and the main body of capital borrowing must be financial institutions such as commercial banks.
2. Principle of equality and mutual benefit: Any party involved in lending must follow the principle of "equality and mutual benefit, voluntariness, keeping promises and short-term accommodation". In the transaction, the financing parties must voluntarily coordinate, trade independently and benefit each other.
3. Short-term use principle: capital lending is a short-term financing method. Therefore, the use of commercial banks' borrowing funds must conform to the characteristics of temporary surplus and deficiency adjustment, which is mainly used to solve the short-term urgent need for funds. Banks and market management departments have the right to impose sanctions and penalties on those who violate the principle of short-term use and change the use of funds without authorization.
4. The principle of timely repayment: both borrowers and borrowers must abide by their credit and maintain their respective reputations. The loan bank must ensure that the principal and interest are repaid on time, and shall not delay the occupation for an excuse. Generally, loan funds will not be issued. If one party breaches the contract, the other party may impose a fine and default interest as agreed. The fine is generally calculated at 3‰ per month, and the penalty interest is calculated at 20%.