China Banking Regulatory Commission, Circular on Matters Relevant to Revising the Approval Procedure for the Establishment of Rural Banks

Main contents: Currently the China Banking Regulatory Commission (CBRC) is responsible for the administration of the number of rural banks to be established, while the main promoter bank, locations and the actual market entry procedures are carried out by banking regulatory bureaux. According to the revision under Article 1 of the Circular, the CBRC shall determine the main promoter, and the number and locations of banks to be established, and banking regulatory bureaux shall be responsible for the actual market entry procedures (Article 1). In regards to locations of rural banks, the original link-up between locations across the country shall be changed to link-up between provinces. In terms of priority for establishment of rural banks, western regions shall take precedence over eastern regions, and less developed counties shall take precedence over developed counties (Article 2).

The main promoter bank of rural banks shall, in addition to having obtained a regulatory rating of Grade 2 or above and having fulfilled the requirements of prudential regulation on an ongoing basis, have a concrete strategic plan for the development of the rural financial market, professional research on the rural financial market, a detailed cost-and-return analysis and risk assessment for the proposed rural bank, sufficient qualified personnel, adequate capabilities in consolidated management, and establishment and management of information technology, a feasible and effective business model for rural finance that has been reached, as well as the intent and specific plan for development in the central and western regions (Article 3). Qualified financial institutions in the banking sector that intend to establish a rural bank shall submit an application to the CBRC accompanied by the development strategy for rural banks, self-assessment report on cross-region development and the annual plan for the promotion and establishment of rural banks. Institutions with legal personality that are subject to regulation by local authorities shall submit a copy of the same to the local banking regulatory bureau (Article 4).