The authorities plan to expand a pilot program that supports new types of rural financial institutions next year, to boost funding for farmers and small rural companies.
In a statement posted on its website, the China Banking Regulatory Commission (CBRC) said it was coordinating with other government agencies and local governments to improve related policies and roll out detailed plans for the program's expansion.
The program, which allows foreign and domestic banking capital to invest in, or to purchase or establish, banking institutions in rural areas, has so far been extended from the originally planned six provinces to all of the country's regions.
"The process goes on smoothly and preliminary achievements have been made," the banking regulator said.
Despite enhanced efforts to develop rural finance in recent years, highly inadequate financial services are said to remain serious in the vast, underdeveloped regions.
A recent report by the country's central bank showed that at the end of 2007, more than 2,800 townships or counties in China, or 7 percent of the total, had no access to credit.
Chinese banks are pulling out from the less profitable rural markets as official figures indicate the number of financial players' outlets serving rural areas stood at 124,000 last year, declining by more than 9,800 compared with three years earlier.
To address the weaknesses of financial services in rural areas, the banking regulator launched the trial project in late 2006 to help financial institutions reach credit-strapped people and firms in rural places.
Citibank China, one of the largest foreign banking players in the country, obtained regulatory approval earlier this week to establish two lending companies in Hubei province, making it the first foreign lender to start such business domestically.
But its major rivals including HSBC and Standard Chartered Bank have already rolled out rural outlets and are preparing for further expansion in the nation's underdeveloped regions.
More broadly, a total of 61 institutions of new types, including village banks, loan companies and rural cooperative fund associations, were open for business at the end of August, taking in a combined deposit of 2.83 billion yuan while extending 1.92 billion yuan of outstanding loans.
About 47 percent of the loans, or 895 million yuan, went to rural households and around 22,800 rural families have reportedly benefited from the new type institutions since the launch of the program.
Small businesses in rural areas were supported with 775 million yuan in outstanding loans, and more than 4,000 of them are said to be the beneficiaries.
Presently, 14 such new organizations are forming with 47 more in initial preparations. The banking regulator estimated that more than 100 new type financial institutions will stand to serve the rural market by the end of this year.
(China Daily October 10, 2008)
