Two top banking officials promised yesterday to push rural
financial reforms to provide more effective financing for the
country's countryside.
Zhou Xiaochuan, governor of the People's Bank
of China, the central bank, said management of the rural credit
cooperatives will be improved and the shareholding reform of the
rural banks will be accelerated.
"The property rights of the rural credit cooperatives will be
further clarified and their corporate governance improved ... to
make them community financial institutions to (better) serve
farmers," he said when addressing the 26th meeting of the Standing
Committee of the 10th National People's Congress.
Zhou also urged that the establishment of the rural postal banks
be accelerated to make postal deposits play a larger role in
supporting rural development.
He said agricultural insurance and farm produce futures should
be developed to reduce the risks of farmers. Other rural financial
innovations, including establishment of micro-credit organizations
and legal private lending, should be encouraged, he added.
Since Chinese farmers still resort to small-scale individual
farming, many financial institutions have found it too costly to
provide services for them, leaving many in need of development
capital.
The newly concluded central rural work conference and last
month's central economic work conference called for more financial
support for the rural areas.
Liu Mingkang, chairman of the China Banking Regulatory
Commission (CBRC), admitted that problems abound with the existing
rural financial institutions.
The small number of rural financial institutions, for example,
cannot cover those farmers who need financing, Liu recently told
the 2006 China Financial Forum in Beijing.
Their low operational efficiency and lack of competition have
added to the financial predicament of the farmers.
Liu said the regulatory body has eased requirements for rural
banks and other institutions willing to enter the rural areas to
support local development.
"We have relaxed conditions for industrial and private capital
to establish new institutions or purchase and merge existing ones,"
he said.
The CBRC released a new guideline last week that halves the
registered capital requirement for rural cooperative banks to 10
million yuan (US$1.28 million).
The new rule also encourages investors to try more financial
products in accordance with rural realities.
Liu said regulations would be strengthened in rural areas to
reduce risks and ensure the healthy development of new financial
establishments.
Tang Min, chief economist of the Asian Development Bank in
China, said the new initiatives taken by the regulators are a
"milestone."
"Ten years from now, when we look back, it may prove to be a
significant breakthrough," he said.
(China Daily December 27, 2006)