Chinese bank axes offer of unsecured loans to buy graveyard space
A mainland Chinese bank ran into howls of protest for offering unsecured loans to buy cemetery plots and suggesting that the debt burden be left to the children and grandchildren of the deceased.
Members of the public, and even state media, reacted vehemently to the “graveyard mortgage plan” jointly proposed by a local bank and a cemetery management company in Kunming, the capital city of southern Yunnan province.
In a country where a small patch of cemetery land can cost as much as 300,000 yuan (US$46,150), a final resting place for the dead has become more expensive than apartments for the living.
Local media found in an investigation that in neighboring Guangdong province, prices for a plot ranged from 10,000 yuan to 300,000 yuan in Guangzhou, Shenzhen and Zhuhai in the Delta River area.
Xishan Beiyin Bank thought it had spied a business opportunity when it decided to tie up with management agency Kunming Jinlong Ruyi Park to lend up to 200,000 yuan without the need for collateral. According to a staff member of the agency, borrowers could take as long as 10 years to repay the loan, but they were subject to an annual interest rate of 9%.
The cheapest choice in the Jinlong Ruyi cemetery was 9,000 yuan for a plot of one square meter. Prices for a two-square-meter plot ranged from 20,000 yuan to 80,000 yuan.
It was a very easy application process that could be completed within a week, the staffer said, as applicants aged under 60 needed to provide only proof of income and bank statements. If the applicants were too old, they could ask their children and grandchildren to do the borrowing.
A manager of the bank said that the graveyard mortgage plan was, like auto loans and property mortgages, just a “regular product” which had undergone a compliance and regulatory process.
The marketing-speak failed to convince the public. State broadcaster Central China Television criticized the funding scheme as seemingly trying to solve a problem for cash-strapped elderly residents when it would in fact increase the financial burden of their children and grandchildren.
The unsecured nature of the product was being used as a pretext for the bank to give out loans, said Dr Thomas Yuen, assistant professor at the department of economics and finance of Hong Kong Shue Yan University.
Yuen said that the bank was exploiting the traditional importance placed by the Chinese on filial piety. He described the loan product as morally wrong for leaving the debt burden to the next generation.
In the wake of the criticism, Jinlong Ruyi Park said that the loan product had yet to be launched, while the local bank said it had given up the business plan.
Click
here for Chinese version
---------------------------------
Apple Daily’s all-new English Edition is now available on the mobile app:
bit.ly/2yMMfQETo download the latest version,
Or search Appledaily in App Store or Google Play