Provisional Rules Governing Rural Fund Cooperatives
(enacted in 2007)
Since 2007, CBRC issued rules governing rural fund cooperatives, a new microfinance method for farmers.
Rural fund cooperatives are independent legal entities, who accept capital from rural households and small enterprise as their shareholders. The cooperatives perform as community banks serving only the town or village community, taking deposit and issuing loans. They are forbidden from setting up branches.
Fund collects deposits mainly from members, donations from society and financing from other banking institutions. The fund primarily satisfies the financing need of members. Large loans are required to get permission from supervisory board first. The rules require risk management of the fund, once the situation of risk management changes, the regulation on the fund is increased. Capital Adequacy Ratio is strictly required to be managed by the fund.
Contents are as following:
Chapter I General Provisions
Chapter II Establishment
Chapter III Membership and Stockholders
Chapter IV Organizations and departments
Chapter V Management
Chapter VI Regulation
Chapter VII Mergence, split, dissolution and liquidation
Chapter VII Supplementary Provisions