China aiming to increase rural banks tenfold

Beijing plans to have 1,027 banks open in China’s rural areas by 2011, an effort to provide wider access to financial services in the countryside, the South China Morning Post reported. The announcement came after the China Banking Regulatory Commission said the majority of the 118 rural banks set up since 2006 had become profitable by June 30. China has relied on rural credit cooperatives since the 1950s to provide financial services in rural areas. In late 2006, Beijing began restructuring the system to provide wider access to private capital and foreign investors to set up rural banks, micro credit companies and rural mutual funds. Spain-based Banco Santander Central Hispano (STD.NYSE, BNC.LSE) and China Construction Bank (601939.SH, 0939.HK) will set up a holding bank for rural lenders, while the Bank of China (601988.SH, 3988.HK) and Temasek Holdings is looking to invest US$2.9 billion to build a rural banking business.