1.Background and main content of policy The 2011 central conference for rural work stated in clear terms that efforts should be made to improve rural banking services; deepen the reform of rural credit cooperatives; to encourage the establishment of community banks in areas where conditions were right, taking the county as a unit; to develop small-loan companies and small loans in rural areas, and to improve the agricultural insurance system.
Relevant departments were asked to follow the requirements of the central authorities and to work toward serving agriculture, rural areas and farmers, and to give full play to the roles of banking of policy nature, commercial banking and cooperative banking in order to establish multi-tiered and diversified rural banking services that would allow mild competition. Efforts should be made to further deepen the reform of rural credit cooperatives to give play to their role as major support for agriculture. Classified guidance would be provided to push for reform of the ownership of rural credit cooperatives.
Commercial banks such as the Agricultural Bank of China and other banking organizations were asked to explore new ways of serving agriculture, rural areas and farmers and enhance support for agriculture.
Efforts should be made to cultivate new-type rural banking institutions with emphasis on the development of medium- and small-sized rural banking institutions, and to encourage private investment in village and township banks. Efforts should also be made to regulate rural cooperative banking institutions and lending companies.
Rural banking institutions5 role as service providers for agriculture, rural areas and farmers would be emphasized and internal control would be strengthened to improve risk control capacity in agriculture-related banking operations.
Support should be strengthened for weak links and key areas in agricultural and rural development and in the improvement of farmers， livelihood. Efforts should be made to promote innovation in collateral arrangements to effectively reduce the burden of rural debtors. Support would be rendered to enterprises that met conditions to enable them to develop themselves through fundraising in stock and bond markets. Efforts should be made to explore ways and models in which futures markets could serve agriculture, rural areas and farmers. Agricultural insurance mechanisms should be improved to expand its coverage to more farm products and more regions. Efforts should be made to innovate insurance products and to develop rural micro-insurance.
2. Implementation of policy and evaluation At the end of 2011, financial institutions of the banking industry had a balance of 14,600 billion yuan in agriculture-related loans, 24.9% higher than at the end of the previous year. The growth rate was 8.8 percentage points higher than the average growth rate of all loans. Medium- and small-sized rural banking institutions continued to play a major role in supporting agriculture. Loans from these institutions contributed to 30% of growth in agriculture-related loans.
At the end of the year, financial institutions of the banking industry had a balance of 3,100 billion yuan in loans to rural households, an increase of 507.9 billion yuan, or 19.1% compared to the end of the previous year. The loans provided strong support for the purchase of means of agricultural production, house building, the purchase of farm machinery and furniture, for the development of rural stores and other economic activities.
Financial institutions of the banking industry had a balance of 10,800 billion yuan in loans to small enterprises (including bill financing), an increase of 1,900 billion yuan, or 25.8%, compared to the previous year. The growth rate was 10 percentage points higher than the average growth rate of all loans.
1) New-type rural financial institutions witnessed rapid development. At the end of 2011, 786 new-type rural financial institutions had been established —726 township and village banks, 10 lending companies, 50 rural financial mutual-aid cooperatives. Of the new-type rural financial institutions, 473 were in central and western regions, accounting for 60% of the total. The 786 new-type rural financial institutions had a balance of 131.6 billion yuan in loans and more than 80% of the loans were directed toward agriculture, rural areas. and farmers as well as small enterprises. These institutions had a balance of 43.55 billion yuan in loans to rural households and 63.15 billion yuan in loans to small enterprises. Households in central and western regions that received loans accounted for more than 70% of total loan- receiving households.
2) The lack of access to banking services in certain townships was tackled in a speedier manner. In 2011, banking services were made available in 616 townships that had previously had a vacuum thereof. By the end of 2011，the number of townships without basic banking institutions dropped to 1,696 from 2,945 when the initiative was launched. The number of provinces or cities specially designated in state planning that had their entire rural areas covered by both basic banking institutions and basic banking services increased to 24 by 2011 from nine when the initiative was launched. Remote rural areas witnessed historic changes in banking services.
In the 1,249 townships that were newly covered by banking institutions, 475 were covered by normal service points, 688 by limit-time outlets, 29 by self-service banking. The number of banking institutions was reduced in 57 townships as a result of township mergers.
In the 1,249 townships that were newly covered by banking institutions, 955 were covered by rural credit cooperatives, accounting for 76%. In 708 townships that were newly covered by banking services, 449 of them, or 63%, were covered by rural credit cooperatives.
3) The reform of rural credit cooperatives was deepened. By the end of 2011, 402 rural credit cooperatives had been transformed into rural banks—212 rural commercial banks and 190 rural cooperative banks.
The share of rural commercial banks at county-level or below in agriculture-related loans increased from 57.2% at the end of 2009 to 67% at the end of 2011. The share of rural cooperative banks rose from 66.1 % to 70% during the same period. The investment in agriculture saw remarkable increase.
4) Banking services at county level or below were enhanced. The Agricultural Bank of China, building on the establishment of a division for agricultural banking, improved the system of management by the county branch under the supervision of the prefectural branch, the provincial branch and the headquarters of the bank, and completed the development of management mechanisms featuring the "six independent controls" of capital, credit, accounting, loan loss reserves, funds and performance evaluation. The progress provided system and mechanism guarantees for its banking services at county level or below.
The Agricultural Bank of China made great efforts to build grassroots teams. Some 5,000 college graduates and college graduate-turned village officials were employed as managers for agricultural banking in its county-level branches.
The Postal Savings Bank of China, which was faced with credit restraints, took small loans and agriculture-related businesses as direction for expansion. Of newly added small loans in 2011, 70.3% were provided to debtors at county level or below. At the same time the bank made efforts to explore ways to serve rural areas through commercial banking. New products such as loans for agricultural infrastructure and for tobacco and sugarcane growers were developed according to local conditions.
5) Agriculture-related banking innovation kept on emerging. In 2011, the China Banking Regulatory Commission, mindful of the new trend in the concurrent development of industrialization, urbanization and agricultural modernization and new changes in economic structure, summed up and promoted agriculture-related banking products and services that were low-cost, duplicable and easy to apply. It continued to promote credit policies to support farmers，professional cooperatives, policies that would allow ownership of forests to be used as collateral as well as policies that would encourage cooperation in agriculture-related loans and agricultural insurance. Various localities also made agriculture-related banking innovation according to their own conditions.
As a result of various restraints, rural banking in general could not meet the need to promote agricultural modernization. Unremitting effort from various sectors was needed to maintain rapid growth in investment in agriculture and to further improve rural banking services.
