China's banking regulator has called for diversified funding channels for the country's underdeveloped rural banking sector.

Tang Shuangning, vice chairman of the China Banking Regulatory Commission (CBRC), said Tuesday that the banking regulator highly encourages private and overseas capitals to finance rural investments.

Rural credit cooperatives should continue to act as the main sources to fund rural banking and to fully support the development of rural enterprises, he told a national banking regulatory conference in Beijing on Tuesday.

He said rural banks should expand their business scopes to finance infrastructure development and facilitate loans for farmers.

China's fifth state-owned bank, the China Postal Savings Bank, which is due to open this year, is expected to focus on credit services in rural areas, Tang said.

Since China eased market entry policies for banking institutions in rural areas at the end of 2006, seven domestic commercial banks have applied to set up subsidiaries in rural areas.

The CBRC has received applications from Minsheng Bank, Beijing Rural Commercial Bank, Tianjin Rural Cooperation Bank, and four other domestic banks.

Meanwhile foreign-funded banks such as the Standard Chartered and the HSBC have also expressed interest in setting up branches in rural areas.

(Xinhua News Agency February 7, 2007)