Now that China eased market entry policies for banking institutions in rural China, seven commercial banks have applied to set up a subsidiary in rural areas. The CBRC has received applications from Minsheng Bank, Beijing Rural Commercial Bank, Tianjin Rural Cooperation Bank and four other domestic banks.

Meanwhile foreign-funded banks such as the Standard Chartered Bank and the HSBC have also expressed interest in setting up branches in rural areas. Village banks will provide financial services to farmers, and be able to invest in and reorganize rural financial institutions.

Domestic institutional investors will be able to take a 20 percent stake in village banks and rural cooperative financial institutions. Individuals can buy up to 10 percent. Working capital limits for branches of domestic financial institutions in rural areas are scrapped, and registered capital requirements are lowered to three million yuan (384,615 US dollars) for county banks and one million yuan for banks in villages and towns.

The proposals make it easier for domestic financial institutions to provide banking services in rural areas and encourage banks to set up ATMs and issue banking cards. The proposals also lower qualification requirements for senior executives in newly established banking institutions in rural areas. The proposals cover six pilot regions -- western Sichuan, Qinghai and Gansu provinces, north China's Inner Mongolian Autonomous Region, northeastern Jilin Province and central Hubei Province.