Two top banking officials promised yesterday to
push rural financial reforms to provide more effective financing
for the country's countryside.
Zhou Xiaochuan, governor of the People's Bank of
China, the central bank, said management of the rural credit
cooperatives will be improved and the shareholding reform of the
rural banks will be accelerated.
"The property rights of the rural credit cooperatives
will be further clarified and their corporate governance improved
... to make them community financial institutions to (better) serve
farmers," he said when addressing the 26th meeting of the Standing
Committee of the 10th National People's Congress (NPC).
Zhou also urged that the establishment of the rural
postal banks be accelerated to make postal deposits play a larger
role in supporting rural development.
He said agricultural insurance and farm produce
futures should be developed to reduce the risks of farmers. Other
rural financial innovations, including establishment of
micro-credit organizations and legal private lending, should be
encouraged, he added.
Since Chinese farmers still resort to small-scale
individual farming, many financial institutions have found it too
costly to provide services for them, leaving many in need of
development capital.
The newly concluded central rural work conference and
last month's central economic work conference called for more
financial support for the rural areas.
Liu Mingkang, chairman of the China Banking Regulatory
Commission (CBRC), admitted that problems abound with the existing
rural financial institutions.
The small number of rural financial institutions, for
example, cannot cover those farmers who need financing, Liu
recently told the 2006 China Financial Forum in Beijing.
Their low operational efficiency and lack of
competition have added to the financial predicament of the
farmers.
Liu said the regulatory body has eased requirements
for rural banks and other institutions willing to enter the rural
areas to support local development.
"We have relaxed conditions for industrial and private
capital to establish new institutions or purchase and merge
existing ones," he said.
The CBRC released a new guideline last week that
halves the registered capital requirement for rural co-operative
banks to 10 million yuan (US$1.28 million).
The new rule also encourages investors to try more
financial products in accordance with rural realities.
Liu said regulations would be strengthened in rural
areas to reduce risks and ensure the healthy development of new
financial establishments.
Tang Min, chief economist of the Asian Development
Bank in China, said the new initiatives taken by the regulators are
a "milestone."
"Ten years from now, when we look back, it may prove
to be a significant breakthrough," he said.
(China Daily December 27,
2006)
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