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Wenzhou Private Capital Sets Foot in Rural Banks Nationwide

wenzhou capital sets foot in rural banks nationwide

On September 28, 2012, half a year after China announced the pilot financial reform zone in Wenzhou, Hengxin Rural Bank initiated by Wenzhou's Cangnan Rural Cooperative Bank opened for service in Liangjiang County, Fujian Province. So far, Wenzhou-based banks have established four rural banks nationwide and also gained the quota to set up other 26 rural banks approved by the China Banking Regulatory Commission. The practice has shown that the innovation fruits from Wenzhou's pilot financial reform are being exported through the platform of rural banks nationwide.

"Taking the advantage of the financial reform, we are going to export to other regions those advanced practices and experience of Wenzhou's finance sector in supporting agriculture sector and micro and small enterprises, so that our reform fruits can be shared around the country.", said Shi Xianjun, president of Cangnan Rural Cooperative Bank. His bank originates from the rural credit cooperative which initiated the interest rate reform in China in 1980, a then small step leading to a giant leap China's later rural financial reform.

Rural banks are a new-type financial institutions which provide financial services for the development of local villages, villagers and agriculture. With a registered capital of 100 million Yuan, invested by 10 shareholders in total, Lianjiang Hengxin Rural Bank is the second rural bank set up by Cangnan Rural Cooperative Bank outside Zhejiang Province. As the main sponsor, Cangnan Rural Cooperative Bank holds a 55% stake while nine local private enterprises from Lianjiang County take up the rest. The first practice of Cangnan Rural Cooperative Bank is Hengxing Rural Bank launched in Fuding, Fujiang Province previously. Meanwhile, another local bank, Bank of Wenzhou, has initiated Wenyin Rural Bank in Peiling, Chongqing.

Lianjiang is a county with only nine banks, leading to an imperfect competition. "When setting up a bank in another province , we can bring in those successful financial practices fulfilled in Wenzhou already to activate the local financial market and better serve the financing of local peasant households and micro and small enterprises." On the day of its opening, a total credit of 35 million Yuan was granted by Hengxin Rural Bank.

Three years ago, Wenzhou capital started its adventure in rural banks, which were then set up only within the Wenzhou region. On April 21, 2009, the first rural bank in Wenzhou, Hengsheng Rural Bank, launched by Ouhai Rural Cooperative Bank together with 22 Wenzhou enterprises went into operation in Oubei Town, Yongjia County. On August 23 the same year, Premier Wen paid a visit to Hengsheng Rural Bank, where a special meeting was held to discuss the reform and improvement of the state policies on rural banks.

On March 28 this year, the State Council announced Wenzhou a pilot financial reform zone. Propelled by the financial reform, Wenzhou's local banks picked up their pace to set up rural banks nationwide. Lucheng Rural Cooperative Bank's Fuming Rural Bank has gone into business in Pingxiang, Jiangxi Province. Meanwhile, the bank has also gained the approval from the China Banking Regulatory Commission to establish 21 rural banks in Guizhou Province, Henan Province and Zhejiang Province, among which three in Bijie, Guizhou Province will open soon. In addition, Longwan Rural Cooperative Bank obtained the quota to launch five rural banks in Jiangxi and Zhejiang not long ago and their layout in Anhui Province is under way. Zhou Dewen, a well-known expert in Wenzhou, believes that the innovations from Wenzhou's financial reform would be exported nationwide together with the establishment of these rural banks around China.

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