Shanghai planning to revitalize domestic financial market (2)

"The finance broker does all the legwork for the client to find and secure the right business arrangement," he noted.

Besides, as commissioned brokers have a vested interest in assisting the client in securing financing, he or she will investigate traditional and non-traditional loan options to find the best solution for a client.

"All we want is to make things transparent and entitle them to a legal identity," Dai said.

The tentative plan will differ from ongoing financial reforms in Wenzhou, a neighboring city famed for private lending but where a local credit crisis has led to direct government intervention.

According to Dai, the Wenzhou model established a government-led lending registration that intends to match the needs of lenders and borrowers. But it may deter borrowers as they have to disclose secretive company information such as revenue and assets.

To dismiss such concerns and given that these middlemen are strongly service-oriented, "it may be more efficient if the government leaves the business to professionals", he added.

This propelled the government research team to come up with the idea of a certified financial broker system. In the tentative plan, Fan suggested a government-run test be organized to determine whether the middleman is eligible to conduct such financial service business.

Once approved, they will register under the local industrial and commercial bureau and work with the guidance of the SME center.

"They can stay as what they used to be and don't need to transform into financial companies.