BEIJING -- China's banking regulators on Monday further eased market access for banks to rural areas and removed some obstacles to the development of rural financial services, in a move to promote the rural development.

All banking institutions are allowed access to rural areas, according to a new guideline, published on the website of the China Banking Regulatory Commission (CBRC), that aims to provide more sophisticated and tailored loan services for rural communities and businesses.

Six provincial areas had previously been included in a pilot program to allow foreign and domestic banking capital to invest in, or to purchase or establish banking institutions in rural areas, according to an earlier guideline issued at the end of 2006.

The new guideline directs loans to the agricultural production sector, and sectors such as the processing of farm produce and transportation in a bid to support the industrial development in rural areas.

It encourages loans to farmers to buy expensive durable consumer products, to finance the building or purchase of homes, to cover medicare costs as well as school tuition for the children of farmers, loans that in the past farmers found difficult to obtain.

The CBRC raised the maximum for micro loans offered to rural people and industry in developed areas to 100,000 yuan to 300,000 yuan, and 10,000 to 50,000 yuan for those in underdeveloped areas.

The commission also said the terms of village loans could be flexible, adding the term for the payment of loans could be fixed according to the cycle of agricultural production.

It again called on the financial institutions in rural areas to simplify the loan application procedures for farmers and rural industry.

The government pledged to accelerate financial reform in rural areas in its annual report made in March.

After the government lowered the working capital limits for domestic financial institutions to establish branches in rural areas to three million yuan (US$384,615) for banks in counties and one million yuan in villages and towns in terms of registered capital, a couple of village banks had been established in pilot areas this year.

The Postal Savings Bank, which started operation on March 20 as the country's fifth state-owned bank, was expected to give a lift to credit services in rural areas, as 60 percent of its outlets were in rural areas. (One US dollar equals 7.6 yuan)