HSBC gets approval for rural bank in China

By Daisy Ku

LONDON, Aug 9 (Reuters) - HSBC Holding Plc (HSBA.L: Quote, Profile, Research, Stock Buzz) (0005.HK: Quote, Profile, Research, Stock Buzz) became the first global lender to launch a village bank in China after winning regulatory approval in a move to tap the country's growing rural economy.

The Chinese government is trying to stimulate investment in the countryside to reduce a rising income gap with the cities, but most rural residents and businesses have great difficulty accessing credit.

To encourage microfinancing, the China Banking Regulatory Commission (CBRC) on Monday launched new guidelines allowing all banking institutions to operate in rural areas.

"We appreciate the opportunity to further extend HSBC's presence in China and capitalise on the new opportunities in the country's under-banked rural market," said Stephen Green, group chairman of HSBC.

HSBC has rural banking operations in Brazil, India, Indonesia, the Philippines and Mexico.

RURAL REFORM

Since end of last year, CBRC has been beefing up financial service reform in rural areas, granting bigger access for lenders in less developed areas such as Qinghai, Gansu, Jilin and Inner Mongolia.