China's banking regulators on Monday further eased market access for banks to rural areas and removed some obstacles to the development of rural financial services, in a move to promote the rural development.
All banking institutions are allowed access to rural areas, according to a new guideline, published on the website of the China Banking Regulatory Commission (CBRC). The commission aims to provide more sophisticated and tailored loan services for rural communities and businesses.
Six provincial areas had previously been included in a pilot program to allow foreign and domestic banking capital to invest in, purchase or establish banking institutions in rural areas, according to an earlier guideline issued at the end of 2006.
The new guideline directs loans to the agricultural production sector, and other sectors such as the processing of farm produce and transportation in a bid to support the industrial development in rural areas.
The guideline also encourages loans to farmers to buy expensive durable consumer products, finance the construction or purchase of homes, and cover medicare costs as well as school tuition for farm children. In the past farmers found these kinds of loans difficult to obtain.
The CBRC raised the maximum for micro loans offered to rural people and industry in developed areas to between 100,000 yuan and 300,000 yuan, and to between 10,000 and 50,000 yuan for those in underdeveloped areas.
The commission also said that the terms of village loan would be flexible. For example, the loan payment terms could be fixed according to the agricultural production cycle.
The policy again called on the financial institutions in rural areas to simplify loan application procedures for farmers and rural industry.
The government pledged to accelerate financial reform in rural areas in its annual report made in March.
After the government lowered the working capital limits for domestic financial institutions to establish branches in rural areas to three million yuan (US$384,615) for banks in counties and one million yuan in villages and towns in terms of registered capital, a few village banks were established in pilot areas this year.
The Postal Savings Bank, which opened for business on March 20 as the country's fifth largest bank, was expected to give a lift to credit services in rural areas. Sixty percent of its outlets are located in rural areas.
(Xinhua News Agency August 7, 2007)
