The central government plans to force Chinese banks to increase their services to the enormous rural population by mandating that for them to open a new branch in certain cities, the lenders must also start one in the countryside.
The policy comes as China's commercial banks accelerate the closure of loss-making rural branches and focus on more lucrative urban markets in the most affluent areas of the country.
Under the new regulations, any bank that wants to open city branches in the relatively poor provinces of Sichuan, Qinghai, Inner Mongolia, Jilin, Gansu and Hubei will be required by the China Banking Regulatory Commission to open at least one other branch at the county level, according to the head of the regulator's integrated finance department, Zang Jingfan. The policy will later be extended to the rest of the country.
'It is their social responsibility to support rural development and the construction of the new socialist countryside,' Mr Zang said.
In order to encourage more investment in rural banking infrastructure, the commission will also lower capital requirements and loosen business scope restrictions and approval procedures for the acquisition or establishment of village banks, credit co-operatives and commercial bank branches, he said.
Significantly, the commission will also allow private investors and non-finance corporations to invest in rural banking institutions.