China to give some rural lenders 2 pct subsidy

BEIJING, May 20 (Reuters) - China will soon provide qualified rural financial institutions with subsidies equal to 2 percent of their loan books, the Ministry of Finance said on Wednesday, in Beijing's latest effort to support the sector.

The payouts would go to rural banks, lending companies and rural credit co-operatives that expanded their overall loans during the previous year, had a loan-deposit ratio of at least 50 percent, and met other requirements set by the banking regulator, the finance ministry said on its website.

The subsidies would equal 2 percent of the average loan book from the previous year of each institution and would be paid by the central government, it said.

As well as authorising a limited number of non-deposit-taking lending companies, China has also encouraged banks to establish a presence in rural areas, for example by lowering capital requirements, to help reduce the income gap between cities and the countryside.

There were 108 such rural financial institutions as of the end of January. Western lenders that have set up rural branches or lending companies in China include Citigroup (C.N), HSBC Holdings (HSBA.L) (0005.HK) and Standard Chartered Plc (STAN.L) (2888.HK). (Reporting by Jason Subler; Editing by Chris Lewis)