International Finance Corporation (IFC), the private lending arm of the World Bank, has made an investment of RMB130 million (about US$20 million) in China’s listed bank Qiongzhong Rural Credit Cooperative (RCC).
As per an IFC’s disclosure filing, the investment supporting the rural financial system consist of a senior debt for a three-year tenor and will be used to aid Qiongzhong RCC in providing loans to small businesses and farmers in China.
“The proposed investment supporting the Qiongzhong RCC is strongly aligned with the IFC’s strategy in China and consistent with the nation priorities which focuses on a balanced rural-urban development,” IFC said.
According to the UFA2020 initiative by the World Bank, China appears as one of the 25 priority countries where 73 percent of all financially excluded people live. It is also noted that China combined with India has the largest share of unbanked people, accounting for 32 percent which largely lives in rural areas.
Established in 2008 and based in Qiongzhong County in the Hainan province, Qiongzhong RRC operates throughout the whole island province and has to date, provided its featured microfinance business model to more than 200,000 farming households.
Since its inception, the rural credit cooperative now manages a microloan portfolio of RMB3 billion (US$420 million) and provides microloans with an average ticket size of US$4,500. It has 17 branches and about 300 agent outlets with banking terminals, covering 10 counties and 100 villages.
“In the context of balanced rural-urban development and UFA goals, IFC is focusing on the development of the rural finance sector which is considered one of the most challenging sectors to reform the Chinese financial industry,” IFC notes.
Listed on the National Equity Exchange and Quotations of China, Qiongzhong RCC will use the latest capital in particular for supporting the development of Hainan province as well as to realise financial inclusion by focusing the loans for micro-borrowers, especially women in rural areas.
By Vivian Foo, VCNewsNetwork