What is the “Village Bank” initiative?
In 2007, the China Banking Regulatory Commission issued its own “Provisional Regulations on Village Banks”, which enabled village banks to be set up in China’s county towns and districts in rural areas. The basic structural requirements specify that a banking financial institution must the majority shareholder, and cannot have less than a 20 percent stake; other partners, which can be individuals or other kinds of legal persons cannot hold more than 10 percent of shares apiece. This unwieldy structure has unsurprisingly not attracted much interest from potential non-banking shareholders, but it has presented an easier way for established banks to wholly-owned village bank “branches”. According to our understanding, these village banks are tending to be settling into fourth- and fifth-tier cities rather than into purely rural areas, and the loans they are distributing are tending to be geared to small businesses; this is good for the funding-starved small companies, however it is not fu
