Dai Xianglong, governor of the People's Bank of China, the central bank, said Monday the state-owned banks and the rural credit cooperatives (RCCs) will increase loans and improve services to help farmers earn more.
The banking policy for RCCs will be more flexible this year, allowing floatation of their interests within a certain limit, he said at a press conference during the current session of the National People's Congress.

State-owned banks, mainly the Agricultural Bank of China, will continue to play the important role in supporting rural economic development.

RCCs have become an important component of China's financial system and by the end of 2001, there were more than 40,000 RCCs across the country with deposits and loans amounting to 1.7 trillion yuan and 1.2 trillion yuan respectively, accounting for 12 percent and 11 percent of the total of China's financial institutions, respectively.

RCCs are expected to increase their deposits by 250 billion this year and their loans by about 250 billion yuan by the middle of the year, 100 billion yuan over the record growth of last year.

By the end of this year, the outstanding loans of RCCs are expected to increase by 200 billion yuan, 60 billion yuan more than the growth of last year, the governor said.

While RCCs are encouraged to extend small loans without collateral to the rural households this year, the supervision over them will be strengthened and their ownership will be classified, Dai said.

RCCs are expected to acquire an additional capital of 10 billion yuan, which will put them in a better position to guard against risks.

In addition, he said, RCCs are expected to improve their management of loans, with an aim to bringing down the ratio of non-performing loans by five percentage points.