| New policy bid to boost rural finance |
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| Sunday,December 09,2007 Posted: 17:58 BJT(0958 GMT) |
| From:China Daily Article type:Reproduced |
Individual investors will be able to buy stakes of two percent in rural lenders, up from the existing 0.5 percent, as the government tries to boost rural financing, the regulator said on Friday.
Zang Jingfan, a senior official with the China Banking Regulatory Commission (CBRC), said the policy is part of new guidelines for the reform and opening of its rural cooperative fund associations - currently the lowest-level organizations in China's financial system.
The regulator will also allow cross-provincial investment in rural cooperative fund associations as part of efforts to boost the development of rural lending, Zang said.
He said investors from outside rural areas are encouraged to invest in the cooperative fund associations.
Loans from county and village cooperative fund associations, the country's main channel for rural financing, account for 12.3 percent of China's total outstanding loans balance, according to the central bank.
"These new policies are expected to encourage more investors to set up rural cooperative fund associations, which are extremely lacking in funds," She Minhua, an analyst with CITIC China Securities, told China Daily.
China has been restructuring the organizations since a push began in 2003 to improve financial services in rural areas.
Jiang Dingzhi, vice chairman of CBRC, said on Friday that the regulator is supporting qualified lenders in rural areas to introduce strategic investors and get listed.
Fifteen rural commercial banks have been established based on the reform of rural cooperative fund associations. Four of those, located in Zhangjiagang, Changshu, Wujiang and Jiangyin, all in Jiangsu Province, plan to launch initial public offerings, the banking regulator said.
Jiang said the new rural financial institutions should serve the agricultural sector and rural areas, emphasizing the need for steady expansion.
CBRC also launched a pilot program last year to encourage community and foreign funding for financial institutions like village banks and loan companies.
Chinese farmers and rural companies have few financing channels for their businesses. Farmers rarely obtain loans above 5,000 yuan, according to the Xinhua News Agency.
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