The total assets of China's rural financial institutions reached 3.72 trillion yuan (462 billion U.S. dollars) by the end of 2005, according to China's banking watchdog.

Sources from the China Banking Regulatory Commission (CBRC) said China's rural financial mechanism is undergoing rapid development after two years of reform.

The CBRC said by the end of last year, the total outstanding loan of China's all rural financial institutions, including rural credit cooperatives, rural cooperative banks and rural commercial banks, had accounted for 10.9 percent of national total at about 2.2 trillion yuan.

The CBRC said the 2.2 trillion yuan outstanding loan indicates an increase of 807 billion yuan, or 57.9 percent growth in comparison with the figure at the end of 2002.

Currently, the total debt of these rural financial institutions amounted to 3.56 trillion yuan, with all kinds of outstanding deposits totaling 3.26 trillion yuan, about 10.8 percent of the national total, said the CBRC.

According to the CBRC, the authority attached great efforts in past years to reform the country's low-efficiency rural financial mechanism by transferring management rights to the lower provincial government.

Currently, 25 Chinese provinces have established provincial-level rural credit cooperatives. The CBRC said the rural credit cooperatives played an important role in offering efficient financial services to farmers.

In addition, the reform also promoted the foundation of 12 rural commercial banks and 60 rural cooperative banks in China, said the CBRC.

The CBRC said as a result of the reform, outstanding non-performing loans (NPLs) of the country's rural financial institutions have dropped 125.9 billion yuan from the early 2005 to the current 325.5 billion yuan.

Source: Xinhua