BEIJING, Dec. 1 (Xinhua) -- The establishment of a deposit insurance system will speed up China's bank reform through raising banks' competitiveness and promoting a fair financial environment, analysts said.
The People's Bank of China (PBoC), the central bank, published draft rules for a deposit insurance system on Sunday and started soliciting public opinion after 21 years of deliberation.
Under the draft rules, accounts with deposits of up to 500,000 yuan (81,500 U.S. dollars) will be insured per depositor if a bank suffers insolvency or bankruptcy.
Deposits exceeding 500,000 yuan will be protected under a fund to help well-managed banks acquire other banks that have serious problems, thus protecting clients by having their deposits transferred to well-managed banks.
Financial institutions will be required to pay insurance premiums into a fund and an agency be set up to manage the money. Domestic banks' overseas branches and foreign banks' China branches are exempt.
"The purpose of the insurance system is to protect depositors, step up supervision of banks and prevent risk in the financial sector", said Zong Liang, deputy head of the international finance institute of the Bank of China.
Thee scheme should stabilize the market expectations of depositors and increase public confidence in the banking system, especially improve the competitiveness of small and medium-sized banks.
"The system will raise the credit and competitiveness of small and medium-sized banks, and level the playing field for China's fragmented financial system where megabanks traditionally enjoy greater credibility with depositors," said Guo Tianyong of the Central University of Finance and Economics.
The Chinese banking sector is dominated by big state-owned lenders and their needs are not perfectly in line with small and private firms, who bear the brunt of high financing costs.
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Xinhua Insight: Long-awaited deposit insurance harbinger for further reforms
BEIJING, Dec. 2 (Xinhua) -- China is undergoing one of the boldest financial reforms so far this year following the central bank's publishing of draft rules on a deposit insurance system.
The People's Bank of China (PBoC), the central bank, published the rules on Sunday and has since started soliciting public opinion after 21 years of deliberation. Full Story
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BEIJING, Dec. 2 (Xinhua) -- China's proposed bank deposit insurance scheme will be an important development for further financial reforms, reducing financial risks and rebalancing the economy, said Fitch in its latest report.
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