context: Rural and agricultural areas lack sufficient financial services, impeding credit access for farmers and small businesses alike. Financial regulators must now ensure the financial infrastructure to facilitate agricultural modernisation and rural revitalisation agendas is in place.

Village-based banks have a critical role to play in rural revitalisation, according to a recent release by China Banking and Insurance Regulatory Commission (CBIRC). Specifically, the document

  • provides an overview of village banks as of end 2017
    • based on a survey of 1,691 banks, 65 percent were located in central and western China, covering 68 percent of all counties
    • of 758 impoverished counties identified by the central government, 416 (55 percent) currently have or plan to set up village banking networks
    • around 60 percent of assets held by village banks are loans, 90 percent of liabilities are deposits
    • 92 percent of funds in village-based banks are from local agriculture and other small businesses
  • provides context on larger players supporting sustainable development of village-based banks
    • large commercial banks that are shareholders in village-based banks provide support on corporate governance, risk management, technology and liquidity
    • according to the survey
      • 5 state-owned commercial banks initiated 139 village banks
      • 6 incorporated banks initiated 70 village banks
      • 97 urban commercial banks initiated 459 village banks
      • 184 rural financial institutions initiated 920 village banks
      • 2 foreign banks initiated 13 village banks
  • indicates CBIRC will
    • continue to facilitate rural revitalisation and poverty alleviation strategies
    • reform investment management, competition mechanisms and evaluation systems, based on the ‘major initiator system’
    • strengthen evaluations and regulation of village banks
    • support village banks to based in impoverished areas where financial services are weak