Chinese banks expand abroad
While foreign banks are moving to tap rural market potential, the big domestic banks seem to have more interest in exploring the outside world than the underdeveloped rural regions of China, as they aim to upgrade their global competitiveness.
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| Chinese banks expand abroad [CFP] |
Yin said Chinese banks felt they had to go overseas, as China had become more involved in the world economy and its currency was gaining a broader global role.
However, he said, for any financial institution in any country, the domestic market was the foundation of its business. He urged Chinese banks to give more attention and support to the rural market.
Back to its roots
Now, at least one state bank has had second thoughts about the rural market. The Agricultural Bank of China (ABC), the main financial service provider for farmers and agriculture in China, began to shift its focus back to rural areas during its shareholding reform, which started in 2007.
Yang Zaiping, executive vice president of the China Banking Association, said ABC should reform its rural financing department to take the lead in rural financial services.
An ABC official, who asked not to be identified, said that the bank would seek to provide financial services to farmers and agricultural enterprises as part of its back-to-the-roots campaign.
One important step in this process, he said, was that the bank launched credit cards for farmers in April 2008, which had been welcomed.
As of March, ABC had issued 14.95 million such bank cards with total credit lines of 24.4 billion yuan to farmers. As of March, about 1 million farmers had used these cards to finance 20.1 billion yuan worth of farm implements or on daily expenses.
ABC president Zhang Yun said at Peking University in Beijing on April 14 that by the end of this year, the number of the cards will total 30 million, with 23 million being issued this year with a credit line of 50 billion yuan.
These cards would cover 3.5 million rural households.
Another important step for ABC to go back to its rural roots were two village banks that it opened in Hubei Province and Inner Mongolia Autonomous Region on Aug. 18.
ABC's moves have led other domestic banks to take a second look at rural markets.
Construction Bank of China, for example, won approval last year to establish a rural bank in Hunan Province.
CBRC vice chairman Jiang Dingzhi said that major commercial banks should adjust their credit and service models to reflect rural conditions as they opened more outlets in such areas. He said he expected major state banks would play a more important role in improving rural finance.
Zuo Xiaolei, an economist with China Galaxy Securities, said major domestic financial institutions should adopt a far-sighted strategy and explore the rural market.
