Tens of millions of farmers in China have obtained cheap,mortgage-free loans from the country's only national credit union network,taking advantage of a credit rating system much faster than urban residents.
Dai Xianglong,governor of the People's Bank of China,the country's central bank,said that approximately 40percent of farmers in 10major grain-producing provinces borrowed money from the government-subsidized financial institution for farming, thanks to the newly created credit rating system.
Meanwhile,in urban China,only Shanghai and southern Guangdong Province are beginning to establish credit rating systems for residents,according to Xinhua news agency.
The governor said 30,510credit union branches in rural China,or 70percent of total branches,provided small loans for farmers with better credit records.
In its guidelines on small loans to farmers published last December,the central bank said interest rates for such small loans may be lower than the bank's benchmark interest rate.It also urged the remainder of the unions to launch the service before the end of this year.
China's rural population totals 900million,compared with 400million in urban areas.
Under the newly created credit rating system,farmers are divided into several credit rating categories by an evaluation group of representatives from the local credit union,village cadres and farmers known for their personal wealth,integrity and credit record.
Millions of farmers with good credit ratings were offered small cheap loans recently for spring plowing from the government-supported credit unions,something they had never dreamt of previously.
Kang Kuanliang,a farmer in eastern Jiangxi Province,said he borrowed 5,000yuan (US$600)this spring from the local credit union without any red tape,and without having to mortgage his house to the union to secure the loan.
The money he borrowed for spring plowing was twice as much as he had spent during the same period last year,according to the news agency.
"Without the credit rating system,it would have been impossible for me to spend so much on farming,"said Kang.
China introduced the system across the countryside last year after a two-year experiment.
The central bank governor said the bank would increase loans for farmers by 250billion yuan this year.
The introduction of the system has also helped farmers across the country to evaluate their own credit records,the governor claimed.
(eastday.com June 10, 2002)
