By Mao Lijun (China Daily)
Updated: 2008-01-10 11:53

　　

Lin Shuwen, a villager in Yanjia village, Lishu county of Jilin Province, invested 100 yuan in Baixin Rural Mutual Credit Cooperative, becoming the smallest shareholder of the new rural financial institution established in March. [China Daily]

The opening of a rural bank by a primarily foreign lender gives hope to the great number of small rural businesses in the country, marking the government's latest drive to provide farmers with easier access to small loans.

In mid-December, HSBC, Europe's largest bank, opened a wholly owned subsidiary in rural Suizhou, in central China's Hubei Province. Other significant foreign lenders including New York-based Citigroup and Asia-focused bank Standard Chartered are preparing to open rural banks as well.

The establishment of village banks will help meet farmers' financial needs by providing loans to agriculture companies, local businesses and individuals.

Realizing the urgency of building a system of rural finance that can stimulate growth, the Chinese government has pledged to introduce new types of rural financial institutions and reform rural finance.

"To improve overall financial services in rural areas, we will continue to carry out rural financial reforms and introduce more types of financial institutions to advance the comprehensive development of rural China," said Jiang Liming, vice-director of cooperative finance supervision department with the China Banking Regulatory Commission.

The country's rural financial market has long been underdeveloped, especially since China's major State banks retreated from rural finance in the late 1990s because of high costs and small business volumes.

Currently, the main financial sources serving the rural economy are policy-oriented Agricultural Development Bank of China, Agricultural Bank of China and more than 30,000 rural credit cooperatives.

CBRC statistics show that farmers were responsible for only 15 percent of the country's total bank loans and deposits even though they account for more than half of the country's population.

At the end of 2006, per capita loans available in rural areas were around 5,500 yuan ($756.53), compared with nearly 40,000 yuan in cities.

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