A sub-branch of the People's Bank of China in Changchun, Jilin Province, recently set up a monitoring system to collect data on new financial institutions in the province's rural areas.
The new measure is part of the government's efforts to reform the rural financial system and improve services in the countryside.
Under the China Banking Regulatory Commission (CBRC) pilot scheme launched in December 2006, which scrapped working capital limits for rural financial institutions, five new institutions were set up in Jilin Province by the end of June.
The monitoring system showed that outstanding deposits totaled 26.8 million yuan and outstanding loans stood at 49.4 million yuan by the end of June.
Nearly all deposits came from household savings and more than 90 percent of loans went to households.
The statistics showed the popularity of the new financial institutions among farmers and also that it is difficult for people to access capital in the country's rural areas.
About 30 new rural financial institutions have opened in Sichuan, Gansu, Qinghai, Hubei and Jilin provinces and the Inner Mongolia Autonomous Region under the CBRC's pilot scheme to boost rural financial services, previously mainly provided by rural cooperatives.
The potential for economic development in rural areas, which implies a huge rural financial market, is attracting more financial institutions.
Most recently, HSBC won regulatory approval to set up a wholly owned subsidiary in Suizhou, in Central China's Hubei Province.
Other foreign firms like Standard Chartered Bank have also shown interest in rural areas.
Meanwhile, seven local banks including China Minsheng Banking Corp, Beijing Rural Commercial Bank and Tianjin Rural Cooperative Bank have applied to set up financial institutions in rural areas.
The regulators are also considering further moves to build a wide-reaching multi-level, sustainable financial system in rural areas, a goal set at the beginning of the year at the National Financial Work Conference.
Jiao Jinpu, deputy chief of the research bureau under the central bank, said the government is considering further liberalizing interest rates to allow institutions to set more reasonable, balanced rates for both rural borrowers and lenders.
(China Daily August 30, 2007)
