Over 7% of China’s Rural Lenders Categorised as High Risk by PBOC


Official data indicates that at least 7% of rural lenders in China are categorised by regulators as high-risk financial institutions, amidst heightened concern over their health in the wake of a potential bank run in the Henan province countryside.

Figures from the China Banking and Insurance Regulatory Commission (CBIRC) indicate that as of the end of 2021 China was host to a total of 1651 village county banks (村镇银行), comprising around 36% of all banking sector financial institutions.

Data from the People’s Bank of China (PBOC) further indicates that 122 village county banks were categorised as high-risk financial institutions as of the second quarter of 2021, accounting for over 7% of all village county banks in China, as well as approximately 29% of all high-risk institutions.

State-owned media said that “integration and reform of village county banks will accelerate against a background of stronger regulation by authorities and accelerated risk disposal.”

“High-quality institutions will have the opportunity to upgrade, while low-quality institutions will make a steady and orderly exit from the market under regulatory guidance.”

Village county banks have existed in China for 16 years, following the release of the “Several Opinions on Adjusting and Loosening Policies for the Entry of Banking Sector Financial Institutions into Rural Village Areas, and Better Supporting the Establishment of New Socialist Rural Villages” (关于调整放宽农村地区银行业金融机构准入政策,更好支持社会主义新农村建设的若干意见) by the China Banking Regulatory Commission (CBRC) at the end of 2006.

They are the most numerous category of banking sector financial institutions in China, as well as the smallest in size on average.

As of the end of 2021 China was host to 4602 banking sector financial institutions, with the 1651 village county banks accounting for around 36% of the total.

China was also host to 1595 rural commercial banks at the end of 2021, as well as 23 rural village cooperative banks.