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Home >> Business
UPDATED: 10:36, December 23, 2006
China eases access for banking institustions in pilot rural areas
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Six of China's provincial areas are to trial easier market access for banks to rural areas, the China Banking Regulatory Commission (CBRC) has announced.

The CBRC published its proposals to ease market access for financial institutions in rural areas on Friday, in a move to promote the development of rural areas, which are struggling to attract investment.

The six pilot regions are the western Sichuan, Qinghai and Gansu provinces, north China's Inner Mongolian Autonomous Region, northeastern Jilin Province and the central Hubei Province.

The proposals allow banking capital from both home and abroad as well as industrial and private capital to be invested in, or used to purchase or establish banking institutions in rural areas.

The proposals encourage the establishment of village banks to provide financial services to farmers, to purchase shares, acquire or reorganize rural financial institutions, and to reform qualified rural credit cooperative agencies as banking institutions.

The proposals raise the minimum shareholding percentage for domestic investors in village banks or rural cooperative financial institutions to 20 percent for financial institutions and maximum of 10 percent for individuals.

The working capital limits for domestic financial institutions to establish branches in rural areas are scrapped, and the registered capital threshold is lowered to three million yuan (384,615 US dollars) for banks in counties and one million yuan in villages and towns.

The proposals lower the threshold for financial institutions to provide banking services in rural areas and encourage large commercial banks to set up ATMs or issue banking cards.

The proposals also lower the qualification requirements for senior executives in newly established banking institutions in rural areas.

Senior officials with the CBRC said the CBRC would enhance supervision to avoid risks.

The proposals set a minimum capital adequacy ratio of eight percent for rural financial institutions.

Source: Xinhua

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