Rural credit agency reform plans

Foreign and domestic operators are to be allowed to invest in rural credit agencies as part of a bid to develop community agricultural banks, the China Banking Regulatory Commission has announced. The country's 30,000 rural credit cooperatives, often blighted by poor risk management and a lack of corporate governance, are to be asked to meet the same standards as China's state banks. From the beginning of next year, they will have to introduce a proper system for grading loan quality while capital adequacy ratios will be more closely scrutinized. The rural credit cooperatives accounted for US$4.6 billion worth of assets in 2005, 10% of the banking sector. Australia and New Zealand Banking Group plans to buy 19.9% of Shanghai Rural Credit Cooperatives Union, which has been renamed Shanghai Country Commercial Bank.