China eases restriction on investment in rural financial market

The China Banking Regulatory Commission (CBRC), the nation's banking watchdog plans to issue new rules governing the mergers and acquisitions (M&As) of small and medium-sized rural financial institutions in a bid to broaden investor's access to rural financial markets, Xinhua New Agency reported.

Jiang Dingzhi, vice chairman with the CBRC said that the new rules will ease current restrictions on investment caps, localities and venture capital financing channels for banking and non-banking institutions' investment in small and medium-sized rural financial institutions.

He also said the CBRC would continue to aid rural financial reform and diversify the ownership of rural financial institutions.

China's rural financial institutions have experienced a robust growth in recent years. By the end of 2007, combined assets of China's small and medium-sized rural banking institution nationwide hit RMB 5.6 trillion (US$ 787.6 billion), more than 150% up from RMB 2.2 trillion in 2005. More than 300 million farmers benefited from loans issued by those institutions.