Driven by the policy of "one province and one policy", the reform of rural credit cooperatives in various regions has been accelerated.
Recently, according to the official website of the State Administration of Financial Supervision and Administration, Guangxi Rural Commercial United Bank, Hainan Rural Commercial Bank, and Sichuan Rural Commercial United Bank were approved to be established. The reply requires that the preparatory working groups of the three banks shall handle the preparatory matters in strict accordance with the requirements of relevant laws and regulations, and complete the preparatory work within 6 months from the date of approval.
According to the payment time, Guangxi Rural Commercial United Bank was approved for establishment on December 15, 2023, and Hainan Rural Commercial Bank and Sichuan Rural Commercial United Bank were approved on December 29, 2023. This means that these three provincial-level rural commercial banks may be officially approved for operation in 2024.
The reform of rural credit cooperatives has been accelerated
As an important part of the mainland's financial system, rural credit cooperatives are the backbone of rural financial services. Further deepening the reform of rural credit cooperatives is of great significance to promoting rural revitalization and promoting common prosperity.
In April 2022, a new round of rural credit cooperative reform was opened, and Zhejiang Rural Commercial United Bank was approved to open, marking the official landing of the "first order" to deepen the reform of rural credit cooperatives in the country.
Subsequently, other provinces followed suit and accelerated the pace of reform. In September 2023, Liaoning Rural Commercial Bank was inaugurated in Shenyang, becoming the first rural commercial bank in China to be established in the form of a unified legal person in the province, and in November 2023, Henan Rural Commercial United Bank and Shanxi Rural Commercial United Bank were officially listed.
In addition, Gansu and Guangdong are also speeding up the establishment of provincial-level institutions. The 2023 government work report of Gansu Province mentions that it will orderly promote high-risk institutional risk-related risks, steadily promote the reform of rural credit cooperatives, and establish Gansu Rural Commercial United Bank.
According to the notice issued by the Guangdong Provincial Government on the implementation plan for financial support for the "high-quality development project of 100 counties, 100 towns and 100 villages" to promote the coordinated development of urban and rural areas, the reform of the provincial rural credit cooperatives will be accelerated, and the establishment of unified legal person rural commercial banks in areas with weak regional financial carrying capacity will be supported to continuously improve the regional economic service capacity.
It is reported that in addition to the above provinces, other provinces and regions are also strengthening communication with relevant departments to improve the reform of rural credit cooperatives.
Choose the path of reform according to local conditions
Under the idea of "one province, one policy", each province can choose to restructure the provincial-level association into a provincial-level rural commercial joint bank with a limited license or establish a unified legal person rural commercial bank in the province in light of the actual situation, or it can also adopt the model of parallel development of provincial-level institutions and several strong rural commercial banks.
Judging from the implementation situation, many provinces have chosen to restructure into provincial-level rural commercial joint banks with limited licenses. Among them, Zhejiang, Henan, Shanxi, Guangxi, Sichuan and Gansu all adopt the model of rural commercial joint bank. Liaoning and Hainan chose to establish a unified legal person rural commercial bank in the province.
It is worth mentioning that although it was also restructured into a rural commercial joint bank, Zhejiang Rural Commercial United Bank adopted the "lower participation and upper participation" equity model, while Henan and Shanxi adopted the "upper participation and lower participation" equity model.
Specifically, Zhejiang Rural Commercial United Bank was established on the basis of Zhejiang Rural Credit Union, and is composed of all legal person rural credit institutions in Zhejiang Province, that is, the "lower participation and upper participation" equity model.
Shanxi Rural Commercial United Bank was restructured and established on the basis of Shanxi Provincial Cooperative Bank, and explored and formed a "top-down" rural credit reform model. Henan Rural Commercial United Bank is funded and established by the Henan Provincial Government, and has formed a three-level management structure of provincial-controlled cities and city-controlled counties through top-down shareholding and holding.
Zeng Gang, director of the Shanghai Finance and Development Laboratory, said that considering the different levels of economic and social development in various provinces and the great differences in the development of the rural credit system, the reform of the provincial association needs to be selected by the provinces according to the actual situation and local conditions.
However, no matter what path is taken, the reform of the provincial association must be consistent with the reform direction of the rural credit institutions, that is, adhere to the market-oriented, legalized, and enterprise-oriented reform direction, and adhere to the principle of rural credit institutions serving the "three rural" and ensuring the stability of the status of county legal persons. Zeng Gang added that at the same time, it is necessary to increase investment and capacity building in financial technology, comprehensively improve the level of financial technology application and competitiveness of rural credit institutions, and realize the healthy, efficient and sustainable development of rural credit institutions under the tide of digital economy.
Behind the reform: three problems are more prominent
It is understood that the reform of rural credit cooperatives in mainland China was launched in 2003. Over the past 20 years, the reform of rural credit cooperatives has made many achievements, the operating conditions have been significantly improved, and the economic level of serving the county has reached a great level.
According to the data, as of the end of 2022, there were 2,142 institutions in the mainland rural credit cooperative system, with total assets of 47.8 trillion yuan, total liabilities of 44.4 trillion yuan, deposit balances of 37.5 trillion yuan, loan balances of 26.2 trillion yuan, non-performing loan ratio of 3.48%, capital adequacy ratio of 12.02%, and a cumulative net profit of 218.8 billion yuan in 2022.
According to the "China Financial Stability Report (2023)" released by the central bank, at present, the risks of rural credit cooperatives across the country are generally controllable, but due to historical, cyclical, institutional and other factors, rural credit cooperatives have also accumulated some problems and risks.
First, the functional positioning of provincial-level associations is not clear. Under the current system, the boundaries of the industry management responsibilities of the provincial-level cooperatives are blurred, and the phenomena of offside, absence and inadequacy coexist, and the problems of "responsibility, power and benefit" are more prominent, and even directly interfere with the operational autonomy of rural credit cooperatives.
Second, corporate governance is relatively weak. Although the rural credit cooperatives have generally established a modern corporate governance structure, the equity structure of some institutions is unreasonable, and an effective governance mechanism of checks and balances has not yet been established.
The third is to deviate from the main business of "supporting agriculture and supporting small enterprises". In order to achieve rapid growth in scale, a small number of rural credit cooperatives have issued large non-agricultural loans, concentrated funds to "build large households", excessively carried out capital market business, and detached themselves from the market positioning of serving the "three rural" areas.
The Central Financial Work Conference held at the end of October 2023 emphasized that various contradictions and problems in the current financial field are intertwined and mutually influential, some of which are still prominent, and there are still many hidden economic and financial risks. It is necessary to comprehensively strengthen financial supervision, effectively prevent and defuse financial risks, and deal with the risks of small and medium-sized financial institutions in a timely manner.
According to the "China Financial Stability Report (2023)", in the next step, the financial management department will strengthen communication and cooperation with local party committees and governments, adhere to the combination of problem-oriented and goal-oriented, accelerate the reform of rural credit cooperatives with "one province and one policy", promote deepening reform and risk resolution in an integrated manner, solve the institutional and institutional difficulties restricting the steady development of rural credit cooperatives, promote the high-quality development of rural credit cooperatives, and provide strong financial support for rural revitalization.
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