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.