Lending levels may be too high in aggregate, but farmers aren’t getting enough of the pie. So says the Chinese central bank, which has called for financial innovation and increased levels of rural lending.
Banks should issue more microloans to farmers to foster rural industries and urbanization, said Liu Shiyu, deputy governor of the People’s Bank of China. Rural credit co-operatives, village banks, microcredit companies and new types of financial institution should all be used to help rural development.
Similar efforts are underway in India, where banks are also slow to heed government calls, for fear of a lack of collateral.
Related reading: Is China’s lending policy really irresponsible?
