How to Remedy the Shortcomings in Financial Services for Agriculture, Rural Areas and Farmers

◎ Step up efforts to introduce private capital, further enrich financial supply for "agriculture, rural areas and farmers," and ease the problems of unbalanced rural financial development and prominent supply-demand contradictions

◎ Expand the scale of forest rights mortgage loans, while also prudently and steadily advancing pilot programs for mortgages on rural land contractual management rights and farmers' housing property rights

Steadily advancing the reform of the Agricultural Bank of China and the Agricultural Development Bank of China, establishing the Postal Savings Bank of China, and setting up more than 1,100 village and township banks... As the "source of living water" for rural economic development, financial services for "agriculture, rural areas and farmers" have received great attention in recent years, the intensity of agriculture-related credit lending has been strengthened year by year, and a multi-tiered institutional system has taken initial shape.

Both market factors and government factors affect financial services for "agriculture, rural areas and farmers." Drawing on practices from across the country over the past year, an Economic Daily reporter interviewed regulatory authorities to look ahead at new changes in financial services for "agriculture, rural areas and farmers" in the new year.

Broadening Channels for Private Capital Entry

Enriching Financial Supply for "Agriculture, Rural Areas and Farmers"

Recently, the China Banking Regulatory Commission launched a policy combination for financial support of "agriculture, rural areas and farmers," successively issuing several guiding documents including the "Guiding Opinions on Further Promoting the Healthy Development of Village and Township Banks" and the "Notice on Encouraging and Guiding Private Capital to Participate in the Property Rights Reform of Rural Credit Cooperatives," further broadening investment channels for private capital in the field of financial services for "agriculture, rural areas and farmers."

It is understood that there are currently 3 main channels for private capital to enter rural finance, namely village and township banks, microcredit companies and rural credit cooperatives. The promulgation of a series of policy measures has provided a solid guarantee for private capital entry, which will undoubtedly further enrich financial supply for "agriculture, rural areas and farmers" and help ease the problems of unbalanced rural financial development and prominent supply-demand contradictions.

According to a relevant person in charge of the Tianjin Banking Regulatory Bureau, private capital has relatively high enthusiasm for entering rural finance. At present, the city's 13 village and township banks have absorbed a total of 1.919 billion yuan in local private capital, with local equity accounting for 52% and private capital accounting for 83%.

For a long time, the main players in China's rural financial market have consisted of rural credit cooperatives, postal savings and branches of the Agricultural Bank of China. The original intention of introducing village and township banks was to activate market competition. According to relevant regulatory provisions, after paying in full deposit reserves, village and township banks should use all available funds for local rural economic construction; at the same time, when issuing loans, village and township banks should first meet the needs of farmers, agriculture and rural economic development within the county area, and only surplus funds may be invested in other local industries or used to purchase agriculture-related bonds, and they may not issue loans outside their locality.

Advancing Pilot Programs for Mortgages on the "Three Rights"

Activating the "pool of spring water" of rural property rights

"The next step will be to expand the scale of forest rights mortgage loans, while also prudently and steadily advancing pilot programs for mortgages on rural land contractual management rights and farmers' housing property rights," a relevant person in charge of the China Banking Regulatory Commission told the reporter.

In recent years, in order to revitalize farmers' resource assets, financial institutions have made many innovations and attempts in loan varieties, among which the pilot program for mortgages on the "three rights" is the most representative. On July 18, 2013, the China Banking Regulatory Commission and the State Forestry Administration jointly issued the "Implementation Opinions on Forest Rights Mortgage Loans," which clearly stated that forest farmers and forestry operators may use contracted commercial forests as collateral to obtain bank loans, marking the official launch of supporting reforms to turn forestry resources into capital.

From nothing to something, from small to large, the advancement of the pilot program for forest rights mortgage loans has not been smooth sailing, and it has also faced difficulties such as the difficulty of assessing collateral and the difficulty of realizing guaranteed assets. During interviews and research, the reporter found that relying on the strength of the village Party branch and village committee to build a credit-enhancement platform between financial institutions and farmers is one effective path.

In Lishui City, Zhejiang Province, China's first rural financial reform pilot zone, the Longquan Rural Credit Cooperative and the local village Party branch and village committee established a "village-level guarantee cooperative." The cooperative assesses the value of villagers' forest trees, rural houses and contracted land. If a villager wants to borrow money, he mortgages the relevant certificates to the cooperative; after the cooperative reviews and approves, the villager goes directly to the rural credit cooperative for a loan without needing to find someone else to provide a guarantee.

Data show that by the end of the third quarter of this year, Lishui City's outstanding forest rights mortgage loans totaled 33,800 loans worth 4.136 billion yuan. This year, 15,400 new forest rights mortgage loans worth 1.974 billion yuan were issued, and the outstanding forest rights mortgage loans of all 9 counties (cities and districts) exceeded 90% of the annual target.