China's banking regulators on Monday further eased market access for banks to rural areas. In a move to promote rural banking development authorities also removed some obstacles hindering rural financial services.

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). The commission 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 investment capital, or to purchase and/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 other sectors. Farm produce processing and transportation are also included in a bid to support industrial development in rural areas.

The regulations encourage loans to farmers so they can buy expensive durable consumer products, finance the construction or purchase of homes, cover Medicare costs and cover school tuition for farm children. In the past farmers found these kinds of loans difficult to obtain.

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

The commission also said that village loan terms would be flexible. Moreover, the loan payment terms would be fixed according to the agricultural production cycle.

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

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

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 few village banks were established in pilot areas as of this year.

The Postal Savings Bank, which opened for business on March 20 as the country's fifth state-owned bank, was expected to give a lift to credit services in rural areas. Sixty percent of its outlets are located in rural areas.

(Xinhua News Agency August 8, 2007)