China's banking regulator said on Wednesday that four more
village banks will soon begin operation to help upgrade the
country's under-developed rural banking sector.
Large financial institutions are interested in developing in the
countryside, with a dozen financial institutions submitting
applications for rural expansion, said the China Banking Regulatory
Commission (CBRC) chairman Liu Mingkang on the sidelines of the
ongoing parliamentary session.
Foreign-funded banks including the HSBC and Standard Chartered
Bank are actively carrying out market research in order to be able
to tap into the rural market, Liu said.
The CBRC has approved 6 pilot schemes in 6 provinces including
Qinghai and Gansu. Two of them -- Huimin village bank and Huimin
finance company -- began operations on March 1 in Yilong county of
southwest China's Sichuan Province.
China's first village bank, Sichuan
Yilong Huimin County Bank, registered capital of 2 million yuan ,
opened for business on March 1 in southwest China's Sichuan
Province, part of a pilot program to improve rural financial
Liu stressed the need to improve the quality of applicants,
saying that despite the lower threshold on registered capital,
quality standards for newcomers are very high.
He reiterated that rural banks cannot solve all rural financing
problems, in particular loans for breeding and planting industries,
if residential houses, collectively owned land, and courtyards
cannot be mortgaged.
"Once the mortgage problem is solved, productive enterprises
will develop rapidly," said the chairman.
Chinese farmers and rural enterprises currently have few places
to turn for funds to finance their business ideas.
Official figures show Chinese farmers rarely obtain loans of
more than 5,000 yuan (US$645.8), much less than the personal or
commercial loans awarded in the cities.
Policy makers hope commercial banks will team up with other
private shareholders to establish lenders at county level or below
and that farmers or small firms will band together to create new
kinds of credit cooperatives, even in small villages.
At the end of 2006, the CBRC scrapped working capital limits for
domestic financial institutions in rural areas so that banking
networks could be developed in the countryside.
It also lowered the registered capital threshold to 3 million
yuan (US$385,000) for banks in counties and 1 million yuan in
villages and towns.
(Xinhua News Agency March 9, 2007)