Industrial and Commercial Bank of China, the country's largest State-owned commercial lender, has been making innovative explorations in aquaculture production to support the development of China's marine economy.

ICBC's branch in Ningde, Fujian province, has launched a fishery raft aquaculture loan product, using water area and intertidal aquaculture certificates, ocean usage leasing rights and fishery raft aquaculture facilities as collateral to enhance borrowers' creditworthiness.

In 2018, the Ministry of Natural Resources and ICBC jointly issued implementation opinions on promoting high-quality development of the marine economy. The bank pledged to provide a financing quota of 100 billion yuan ($14.5 billion) in five years.

The aquaculture industry is a pillar industry in Ningde, which accounts for one-third of the provincial coastline.

Prior to the launch of the fishery raft aquaculture loan product, aquaculture farmers in Ningde mainly applied for small unsecured loans from village and township banks, with low credit limits, due to the lack of traditional collateral such as property. The annualized interest rate for such loans was usually between 8 percent and 12 percent, said Li Zhi, head of the financial inclusion department at ICBC's Ningde branch.

Some local aquaculture farmers and businesses were unable to obtain bank loans because they did not meet the requirements.

ICBC Ningde branch has conducted in-depth research and helped the local government formulate rules for the identification, registration, circulation and disposal of new types of production factors, such as fishery raft aquaculture facilities.

The bank has obtained a list of offshore aquaculture enterprises that have obtained aquaculture certificates and passed the acceptance inspection conducted by the local ocean and fisheries bureau.

It has also worked with insurance companies to understand which customers have already purchased important insurances, such as typhoon index insurance and fishery raft aquaculture facilities property insurance, creating a whitelist and accurately targeting safe and compliant aquaculture farmers or businesses, Li said.

ICBC Ningde branch has established scientific models to decide which borrowers have access to fishery raft aquaculture loans, using a scoring system based on information such as the borrower's debt-to-income ratio, the number of banks that provide financing to the borrower, its method of obtaining the sea area usage rights and the number of years it has been engaged in aquaculture. Borrowers achieving a score of 60 or higher are given access to loans.

The bank has also created a loan amount estimation model based on a combination of the above-mentioned information and other available data, including credit reports and bank statements of aquaculture farmers or enterprises. Aquaculture farmers can obtain a maximum credit of 2 million yuan per individual, while aquaculture enterprises can receive up to 10 million yuan per borrower, Li said.

These efforts have effectively revitalized new types of production factors, such as fishery raft aquaculture facilities, and solved the financing difficulties faced by aquaculture farmers who cannot meet the requirements for obtaining unsecured loans or lack traditional collateral, thus promoting the development of the local aquaculture industry.

ICBC Ningde branch has been conducting regular post-loan inspections of fish farm aquaculture sites, communicating regularly with industry associations, and closely monitoring the dynamics of the aquaculture industry and changes in market prices.

To share the credit risk, the bank has signed strategic cooperation agreements with local marine investment companies that have sea area usage rights and State-owned guarantee companies.

Marine investment companies have assisted ICBC in managing the entire lending process, verifying the authenticity of a loan applicant's sea area usage rights lease contract, ensuring that the aquaculture farmer is a legally compliant customer, providing satellite maps to locate fish farms in longitude and latitude and monitoring risks in a targeted manner.

If loan defaults occur, marine investment companies will help the bank dispose of the marine area and intertidal aquaculture certificates, fish farm aquaculture facilities and sea area usage lease rights.

State-owned guarantee companies provide loan guarantees for aquaculture farmers or enterprises, with a credit guarantee ratio of no less than 80 percent.

By the end of January, more than 119 customers of ICBC Ningde branch had obtained fish farm aquaculture loans, with an average loan amount of more than 1.2 million yuan, at preferential interest rates. The loan term is one year.

The nonperforming loan ratio for this type of loan is only 0.61 percent at the Ningde branch, Li said.