China's banking watchdog urged banks to ensure loans and credit to grain producers and other agriculture-related enterprises on Thursday, in a bid to spur production as grain supply pressure is kept soaring in China.

Banks across the country should allow more funds to support grain production and non-agricultural loans should be controlled amid the tight monetary policy, said Jiang Dingzhi, Vice Chairman of the China Banking Regulatory Commission (CBRC).

The growth rate of agricultural-related loans this year should not be slower than that of last year, he said on a tele-conference meeting on Thursday, stressing that the freewill closure of the county branches and outlets of large commercial banks are not allowed.

The unprecedented snow havoc and the severe drought that hit northern China this spring, during the ploughing season, will make it harder to ensure grain supplies this year, Chen Xiwen, the director of the office of the central leading group on rural work, has said.

International grain supply strain and price rise also add pressure for China's grain production which is critical to feed the 1.3 billion population.

The country's grain output exceeded 500 million tons last year, 15 million tons less than the total demand, official figures show.

Jiang urged rural cooperatives, commercial and policy banks to follow credit ethics and take on their social responsibilities to support rural development.

CBRC Chairman Liu Mingkang noted the guaranteed mortgage system should be renovated to allow easier loans for farmers. Fiscal incentives should also be designed to encourage rural lending.

The central bank said on Monday the the country would continue with its tight monetary policy, which would be adjusted in response to changes in the domestic and world economies.

The bank reiterated that credit preference would be given to relatively weak sectors including agriculture, employment, education and small and medium-sized enterprises.

(Xinhua News Agency April 5, 2008)