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January 25, 2010

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Home » Business » Economy

Lend more to rural businesses, banks told

CHINA'S central bank yesterday asked the nation's lenders to increase loans for rural development as farmers and rural business still had limited access to financing.

Banks should issue more micro-loans to farmers to foster rural industries and urbanization, Liu Shiyu, deputy governor of the People's Bank of China, said at a meeting on rural financing service yesterday.

"More efforts should be made to encourage financial institutions to offer rural financing services and participate in rural financial market," he said.

Rural credit cooperatives should speed up corporate restructuring and play a leading role in rural financial market, Liu said.

He also urged efforts to establish more village banks, micro-credit companies and new types of financial institutions in the rural areas.

Poor access to fund, as one of the reasons, has long kept China's rural development left behind the urban modernization.

The situation has not been significantly improved, despite years of exhortations. Banks have proved reluctant to lend to farmers who often lack collateral.

Rural loans rose 29 percent on year in the first three quarters of 2009 to 8.8 trillion yuan (US$1.29 trillion), 8.3 percentage points higher than a year earlier. But this lagged a 34.2 percent rise in total yuan loans in the same period.

The Agricultural Bank of China, one of the country's top four state-owned commercial banks, lent a total of 150 billion yuan to rural households last year, the lender said last week.


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