CBRC chairman Shang Fulin was quoted by Study Times as saying that commercial banks, rural credit cooperatives as well as non-banking financial institutions will be open to private firms.
These firms will be encouraged to own a major stake in banks that are established in small towns and villages.
Existing shareholders could cut down their stake in these banks, thereby enabling participation of more number of private firms.
Although small and medium-sized enterprises contribute about 60% to GDP, the majority of the loans go to large state-owned firms. This practice has been severely criticized by economists.
A pilot program was given green light by the CBRC in 2014, which allowed an assortment of technology, manufacturing and services companies to start five new privately owned banks in Tianjin, Shanghai, Zhejiang and Guangdong, Reuters reported.
Approval was also given in December for the commencement of trial operations of internet firm Tencent’s Shenzhen Qianhai Weizhong Bank.
CBRC is an agency of the People’s Republic of China (PRC) authorized by the State Council to regulate the banking sector of the PRC except the territories of Hong Kong and Macau.
Image: Chinese banking system is offering a disproportionate amount of lending to state-owned firms. Photo: courtesy of Keattikorn/ FreeDigitalPhotos.net
