China's first village bank opened for business yesterday in southwest China's Sichuan Province, part of a pilot program to improve rural financial services.

The Sichuan Yilong Huimin County Bank, in Nanchong of Sichuan Province, has registered capital of 2 million yuan.

It is one of the first five new types of rural financial institutions approved after the banking regulator lowered market entry restrictions in the rural banking sector in December.

According to officials from the Sichuan branch of the China Banking Regulatory Commission (CBRC), Nanchong City Commercial Bank holds a 50 percent stake in the new village bank.

Five private companies based in Nanchong own the other half of the bank.

The village bank offers small loans and deposit services.

Farmers can get loans of up to 20,000 yuan without guarantee, while small enterprises or farmers engaged in special areas can obtain loans of up to 100,000 yuan.

The interest rate for loans is higher than the central bank's benchmark interest rate.

The bank is the smallest in China, with only 10 staff and two counters at one outlet covering an area of 40 square meters.

The Huimin Lending Company, a subsidiary of the village bank and 100 percent-invested by Nanchong City Commercial Bank, also opened in Jincheng and Ma'an in Yilong County yesterday.

The company provides only a loans service.

The two rural financial institutions have already held shareholder meetings, elected boards of directors and supervisors, and worked out company regulations and management rules, Wu Qifu, a Yilong County official, told China Daily.

Wu said they planned to build convenient and flexible borrowing processes and develop small loan products tailored to farmers and the rural sector.

As one of six pilot provinces for rural financial institutions selected by the CBRC, Sichuan has chosen Nanchong, Mianyang and Guangyuan for the program.

(China Daily March 2, 2007)