BEIJING, Feb. 7 -- China is encouraging private enterprises to initiate setting up small and medium-sized rural financial institutions, signaling the government's determination to revitalize the countryside by further opening up the rural financial industry to private capital, according to a report by Xinhua News Agency.

"The China Banking Regulatory Commission is endeavoring to increase the proportion of private capital in rural financial institutions," a person who works for it told Xinhua. "The move is to be carried out on two principles: giving priority to local investors, such as leading private enterprises and major farm owners, and diversifying the stock structure."

Small and medium-sized rural financial institutions are established mainly through private investment to facilitate the development of rural areas, farmers and agriculture. They are made up of several types of financial institutions including rural commercial banks, rural cooperatives and village banks, among others, serving as an important channel for private capital to enter the banking industry.

China had 468 rural commercial banks, 1,803 rural cooperatives and 1,071 county banks by the end of 2013, according to the commission's statistics.

Rural cooperatives are the major credit provider, accounting for 70 percent of the loan balance.

Rural commercial banks, many of which transformed from rural cooperatives, held 6.3 trillion yuan (1.04 trillion U.S. dollars) in total assets and 78.3 billion yuan in after-tax profits by the end of 2012.