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Private, foreign funds allowed to invest in rural financial institutions
(Xinhua)
Updated: 2006-02-22 10:48
Private and foreign funds will soon be encouraged to invest in rural
financial institutions, according to a document released by China's central
authorities on Tuesday.
The establishment of new financial institutions will be permitted at the
county level if they obtain adequate capital and meet strict operating
procedures, said the document issued by the Communist Party of China (CPC)
Central Committee and the State Council.
The document calls for massive reforms to enhance the quality of life of
rural residents with the introduction of a dozen measures regarding the
countryside's financial sector.
In recent years, China's state-owned commercial banks have trimmed their
rural branches. Many of the remaining rural bank branches collect deposits but
seldom provide loans. As a result, farmers face difficulty obtaining capital to
finance new businesses or projects.
The document urges financial institutions at the county level to invest a
portion of new deposits in the area they are located boost agriculture and rural
economy.
Countryside bank branches that receive deposits remitted from rural residents
working in urban areas should be invested back into the rural community, said
the document.
It also asks larger banks to better support the rural areas. The Agricultural
Development Bank of China should readjust its function and expand its business
and capital resources to rural areas. The China Development Bank should invest
more in rural infrastructure construction and agricultural resources
exploitation.
China also plans to foster small-volume loan-providing organizations set up
by individuals, corporations or associations.The document proposes to guide
farmers on how to develop capital-acquiring, mutual benefit societies and
establish standards for nongovernmental debit and credit, said the
document.
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