Web Exclusive

Rural banking threshold lowered for private capital

By Hu Yang (chinadaily.com.cn)
Updated: 2010-06-17 17:37

Private capital may acquire the qualification to become a main sponsor of rural banks, changing the current rule that a village or county-level bank must have a bank as its main sponsor and largest shareholder.

Related readings:  Rural social security system needs more funding  Rural economies may break invisible shackles of hukou  Private sector provides 90% of new jobs in China  Govt wants private sector boost

Securities Times got the information from a senior executive in the banking industry who wants to remain anonymous, and the person also revealed that specific measures will be discussed at the 4th National Financial Work Conference, which will be held in the second half of this year.

Current regulation stipulates that the only or largest shareholder of a rural bank must be a banking financial institution and the share it holds must be no less than 20 percent of the total; individuals or non-banking enterprises are only allowed a 10 percent stake at most.

The reform is believed to be a response to the State Council's recent statement to encourage the development of private capital.