Foreign banks venture forth
Foreign banks, which provide high-end services in cities, saw an opening in the rural market after the China Banking Regulatory Commission (CBRC) in December 2006 revised regulations covering rural banking facilities. One of the CBRC's changes was to reduce the amount of capital needed to establish rural financial facilities.
![China's rural market attracts foreign, domestic banks [CFP]](http://images.china.cn/attachement/jpg/site1007/20090424/00016c8b5de90b5b59d31e.jpg "China's rural market attracts foreign, domestic banks [CFP]") |
| China's rural market attracts foreign, domestic banks [CFP] |
The changes meant that foreign financial institutions such as HSBC and Citigroup, alone or in partnership with local investors, could establish rural banks and loan companies in selected areas.
In early 2007, the government chose 36 counties and villages in six regions, including the provinces of Hubei, Sichuan, Gansu, Jilin and Qinghai as well as Inner Mongolia Autonomous Region, as pilot locations for rural-finance reform. The pilot program expanded to 31 provincial-level regions on the Chinese mainland at the end of 2007.
UK-based HSBC was the first to test the waters, setting up its first rural bank in Suizhou County in central Hubei Province in December 2007. The bank aimed to lend to agricultural enterprises and farmers. So far, HSBC has opened five rural banks in the provinces of Hubei, Fujian and Guangdong as well as on the outskirts of Chongqing and Beijing municipalities, where farming continues.
Following HSBC, Citigroup and Standard Chartered Bank began to make their way into the hinterlands, establishing rural financial outlets.
Citigroup opened two lending firms in two counties of Hubei Province and plans a third in northeastern Liaoning Province.
After establishing its first micro-finance program in Xinjiang Uygur Autonomous Region, the one that made the loan to Sawut, Standard Chartered Bank opened its first village bank in Inner Mongolia in February this year.
An HSBC official who declined to be identified said in an email to Xinhua that setting up village banks was in line with the government's guidance to boost rural development, and the bank anticipated making a profit in the long haul.
