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

Villages account for less than one-sixth of all bank branches around the country, and there are just 1.26 outlets on average available to every 10,000 people in rural areas compared with two in cities.

The inadequate supply of financial services has long troubled the rural economy's development. The government has stepped up efforts to reform rural finance and build a system that can stimulate development.

The CBRC issued a regulation to encourage private investment in the rural financial sector in 2006.

And the government launched a pilot scheme, which was planned in six provinces and autonomous regions including Hubei, Jilin, Sichuan, Qinghai, Gansu and Inner Mongolia, encouraging individuals, private companies and all financial institutions to get involved in rural financing.

"The past few years witnessed significant progress in the reform and development of rural finance," Jiang said.

CBRC statistics show that by the end of June 2007, there were 111,302 financial outlets in rural China, accounting for 57 percent of the country's total.

The government also lowered the rural banking threshold at the end of 2006. The registered capital threshold was lowered to 3 million yuan for banks in counties and 1 million yuan in villages and towns.

Last year, tens of village banks, with the Huimin village bank in Yilong County of Sichuan Province as the first, were approved by the CBRC to open for business in the pilot provinces.

China Postal Savings Bank, which was established last year, is also expected to play a significant role in serving the rural areas.

While recognizing the necessity of introducing new types of rural financial institutions, experts said the government should do more and offer a supportive policy for rural finance.

The low profitability of rural financial institutions has hampered the development of rural finance.

Experts said a cut in rural financial institutions' corporate income tax and business tax would help them improve their balance sheets.

They also suggested legislation for rural finance, saying a sound law could help ensure rural financial institutions provide quality financial services while serving rural businesses effectively.

   1 2   

   1 2