Chinese Central Bank Calls for Increases to Risk Tolerance for Rural Revitalisation Loans


China’s top financial authorities have called for upward adjustments to the risk tolerance for certain categories of lending in a bid to drive rural revitalisation policies.

The Chinese central bank in tandem with other financial authorities jointly issued the “Opinions Concerning Financial Support for Consolidation and Expansion of the Results of Poverty Alleviation Campaigns and Comprehensively Driving Rural Village Revitalisation” (关于金融支持巩固拓展脱贫攻坚成果全面推进乡村振兴的意见) on 30 June.

The Opinions outline a slew of requirements for financial institutions to drive financing of poverty alleviation and rural village revitalisation, including:

  • Strengthening funding support for banks and financial institutions in servicing rural village revitalisation.
  • Implementing fiscal and taxation award and subsidy policies and risk sharing mechanisms.
  • Strengthening assessment and regulatory restraints.

With regard to assessment and regulatory restraints, the Opinions call for “appropriately increasing the risk threshold for rural-related loans.”

“Where the non-performing loan ratio of rural-related loans at a bank is higher than its annual non-performing loan target for all loans by three percentage points or less, then this will not be a factor for the deduction of points from regulatory assessments or internal assessments.”

The Opinions also call for financial institutions to strengthen their use of fintech to drive rural financial support, outlining the use of big data and cloud computing to “effectively compile credit information on rural entities, optimise risk pricing and management mechanisms, increase client categorisation and credit extension capability, reduce the dependence on collateral and guarantees, and gradually increase the share of [rural] loans.”

“Develop rural digital financial inclusion, and make use of technologies including 5G and smart terminals to develop online services platforms or mobile applications, drive fully digitised mobile operations, and support rural entities in using online channels to independently obtain financial services.”