Differentiated reserve funds policy for rural financial institutions, CBRC official

China's rural areas still constitute the weakest part of the country's entire financial system, said Jiang Dingzhi, vice chairman of the China Banking Regulatory Commission, at a symposium on Saturday, therefore, efforts must be beefed up to build an effective and viable government bolstering mechanism to bring out the integrated supportive function of monetary, fiscal and supervisory policies. As for rural cooperative financial institutions and innovative rural institutions, a differentiated reserve fund policy shall be continued.

Statistics show between 2003 and October 2007, the central bank raised bank reserve fund ratio 13 times consecutively by 7 percentage points in attempts to reinforce control of money credits, but a relatively low deposit reserve ratio has been maintained for rural cooperatives, which made about 100 billion yuan available to those financial institutions in the rural area.

As regards fiscal policies, Jiang suggested encouraging inputs into agriculture and rural regions with an eye to improve farmers' livelihood by extending agricultural loans, set up rural insurance institutions or start loan insurance, provide fiscal interest discount and insurance subsidy. Meanwhile, new regulatory measures in support of financial innovations shall be introduced to relax restrictions on capital, institutions and businesses, attract capital investment to the broad rural regions in the country, and create capital flow channels from urban areas to rural areas.

In addition, Jiang stressed over innovation of financial development models, tools and services in the rural area to boost the service level of finance to modern agriculture and the construction of a new countryside.