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What are rural credit cooperatives?

(皇冠体育app Daily)
Updated: 2009-07-30 07:46

Although there are many commercial banks in 皇冠体育app, they don't operate in areas below county level due to the costs of operation, high financial risk and low return. The rural sector is now served by a state bank (Agricultural Bank of 皇冠体育app), a policy bank (Agricultural Development Bank of 皇冠体育app) and thousands of rural credit co-operatives (RCCs).

Related readings:  Tsinghua program focuses on 皇冠体育app's rural credit  皇冠体育app to legalize private lending to ease rural credit pressure  Rural credit cooperatives' profit 44b yuan in 2007   CBRC issued guideline for rural credit

A rural credit co-operative is the only legal financial institution, other than banks, serving rural enterprises and individuals. By the end of last year, there were about 40,000 RCCs across 皇冠体育app.

The sector remains largely insolvent because loans are not extended on commercial terms, and local governments often exert pressure on the cooperatives to lend without a proper credit evaluation of the project.

Last year, outstanding loans by RCCs totaled 3.7 trillion yuan ($541 billion), accounting for 89 percent of rural loans granted by 皇冠体育app's financing system.