Agricultural Development Bank of China (ADBC) has been given the nod to grant loans to small agro-firms, a "breakthrough" for the policy bank whose loans mostly go to government-designated agricultural and rural sectors.

 

Approved by the China Banking Regulatory Commission (CBRC), pilot business will be conducted by the ADBC's Shandong, Jiangxi and Chongqing branches, before spreading to the whole bank, it said in a statement.

 

China set up ADBC and two other policy banks - China Development Bank and The Export-Import Bank of China - in 1994 as key channels of policy financing, a move that enabled the other Big Four state banks to be solely devoted to commercial business.

 

The mission for ADBC is to raise funds for agricultural businesses specified by the central government and to serve as an agent for the state treasury to allocate special funds for agricultural development.

 

The bank's business transformation heads towards the market, analysts say, and ADBC emphasized in the statement the need for a market-based loan.

 

Loans will target small agro-businesses that "exert a fairly big impact on the development of agriculture and rural economy and broadly represent the planting, breeding and processing industries," it said.

 

The new business will receive separate financial management and assessment amid other measures aimed to guard against operation risks.

 

(Xinhua News Agency March 21, 2006)