Apr 10, 2019 (China Knowledge) - The China Banking and Insurance Regulatory Commission (CBIRC) has granted approval to Shanghai-listed Jiangsu Changshu Rural Commercial Bank to set up a new village bank named Xingfu Village Bank in Hainan to manage its other 30 village banks.
The new Xingfu Village Bank will hold complete stakes of its 30 other village banks in the provinces of Hubei, Jiangsu, Henan and Yunan and will also be able to make acquisitions of other village banks across the country.
Village banks which primarily conduct their business in China’s rural areas such as villages or townships have thrived in recent years as part of the government’s move to promote financial inclusion.
Currently, village banks in China that are set up by large commercial banks are managed by a department of business division in the parent bank. This management model tends to have high costs due to the difficulty in coordinating the various village bank the parent bank has established or owns.
The new Xingfu Village Bank instead adopts the model previous set up by the China Banking Regulatory Commission (CBRC) which allows certain commercial banks to designated a village bank under their control as an investment management arm to hold shares of all village banks it owns.
This new management model helps to lower management costs and can also attract more funds as it can group up all the banks in manages to attract investment.
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