The China Banking Regulatory Commission is pushing for lenders to accelerate the growth of financial inclusion loans that target disadvantaged rural areas by providing concessions for non-performing assets in this area.
The “CBRC Office Notice On Properly Performing 2018 Three Agricultures and Poverty Alleviation Financial Services Work” (中国银监会办公厅关于做好2018年三农和扶贫金融服务工作的通知) was issued on 19 March, and calls for “financial inclusion to focus on rural villages” and banks to “better satisfy the various financial needs for rural village revival.”
The Notice proposes that banks strive to keep the overall growth of financial inclusion rural business loans and financial inclusion loans involving rural micro-enterprises higher than the average growth for other forms of lending.
The Notice also sets the same target for poverty alleviation micro-loans and targeted industry poverty-alleviation loans, with the goal of reducing the number of Chinese rural villages that lack banking services or basic financial services by at least one third in 2018.
In order to incentivise rural financial inclusion by banks, the Notice proposes that when the non-performing loan ratio for rural loans and targeted poverty alleviation loans exceeds their respective annual NPL targets by 2 or less percentage points, this amount not be deducted from the internal assessments of banks.
The Notice also requires that banking sector financial institutions formulate and improve systems for exemption from liability when duties are fulfilled with respect to rural or poverty alleviation financial services.