BEIJING, Oct. 24 (Xinhua) -- China may allow small rural lenders, which are
currently only allowed to issue loans, to restructure into village banks or
lending companies, as the country moves further to improve financial services in
rural areas.
Jiang Dingzhi, vice chairman of the China Banking Regulatory Commission
(CBRC), said on Wednesday the qualified small lenders in rural areas could
restructure according to the requirements of the commission.
However, he did not offer details on the qualifications of the lenders or
possible procedures involved.
Jiang also said the nationwide expansion of rural banks with both foreign
and domestic capital should be carried out "steadily", instructing local
watchdogs to allow one or two financial institutions to begin trial operation in
each province as an initial step.
The CBRC announced earlier this month that it would extend its pilot
project of building more rural financial institutions to all the country's
regions.
Previously, only six provinces were included in the pilot program to allow
foreign and domestic banking capital to invest in, purchase or establish banking
institutions in rural areas.
Jiang stressed that the establishment of new rural financial institutions
should serve the agriculture sector and the rural areas and he emphasized steady
expansion to avoid an irrational boom of rural financial institutions.
So far, 23 rural financial institutions in the pilot areas have opened for
business, including 11 village banks, four rural loan organizations and eight
rural cooperative fund associations.
Jiang said eight of the total 23 have begun to report profits.
Chinese farmers and rural enterprises currently have few places to access
funds for their businesses. Official figures show Chinese farmers rarely obtain
loans above 5,000 yuan (666.7 U.S dollars).
After the government lowered the working capital limits for domestic
financial institutions to establish branches in rural areas, a couple of village
banks were established in pilot areas this year.
HSBC got the green light from the CBRC to set up a village bank in Hubei
Province, becoming the first foreign bank to set foot into the nation's vast
rural financial market.
