OREANDA-NEWS.  October 01, 2014. To implement the decisions of the State Council on further improving rural financial services, and enable the improvement of rural payment services to play a fundamental role in developing inclusive finance and improving the mechanism for balanced development and integration of rural and urban areas, the PBC has released the Guidelines on Comprehensively Deepening the Construction of Rural Payments Services (PBC Document (2014) No. 235).

Rural finance is at the core of rural economy and rural payment service is the basis of rural financial services. Deepening the construction of rural service payment environment to provide smooth payment and clearing channels in rural areas and make it easier for money to circulate will be of great significance for the upgrading and reform of rural financial services and for the development of the agricultural sector, rural areas and farmers.

In 2009, the PBC defined the overall objectives, major measures and requirements, and safeguards for comprehensively improving the rural payment environment in the Guidelines on Improving the Payment Service Environment in Rural Areas (PBC Document (2009) No.224). More than four years have passed since then. The PBC has worked together with the local governments, banking financial institutions, clearing institutions, payment institutions and other stakeholders to seek a breakthrough in improving access to financial services in villages and townships and balancing the allocation of payment service resources in rural and urban areas, built a payment and clearing network system covering all agro-linked financial institutions, established a bank account service system that supports the implementation of agriculture-supporting policies, developed a system of non-cash payment instruments suitable for rural areas, and promoted bankcard services tailored to rural migrant workers, bankcard cash withdrawing service and the application of mobile payment in rural areas, for the purpose of putting in place a rural payment service system with Chinese characteristics, and promoting balanced development of rural and urban financial services and inclusive payment services.

As of end 2013, rural financial institutions opened 2.41 billion personal bank accounts and issued 1.5 billion bankcards. As a result, almost every rural dweller has bankcards and all rural households have bank accounts, making it possible for subsidies to be disbursed to each household. More than 80,000 rural financial institutions have linked their outlets to the PBC’s payment system, including the outlets of almost 40,000 rural cooperative financial institutions and more than 1,400 township and village banks, and accounting for more than 70 percent of the total. More than 90 percent of the banks’ rural outlets are connected to their internal clearing system.

The rural credit bank clearing and payment system has covered the outlets of almost 80,000 rural cooperative financial institutions. Between 2010 and 2013, a total of 1.78 trillion yuan were disbursed to recipients’ bank accounts and bankcards in 76 billion transfers as payments from the new rural pension insurance and new rural cooperative medical insurance schemes and subsidies for rural households. Aided by the bankcard agriculture-supporting cash withdrawal service, the rural dwellers can withdraw money from their cards, make payments for their consumption, or move the money to another account after subsidy is transferred to their bankcards. More than 85,000 agriculture-supporting cash withdrawal service points are located in 480,000 administrative villages, including in more than 80 percent of the villages that were previously not covered by any financial service outlet. Almost all the villages and towns are now covered by the agriculture-supporting cash withdrawal service points. Between 2010 and 2013, a total of 65 billion yuan of cash were withdrawn from cash withdrawal service in 190 million cash withdrawal transaction. As each withdrawal transaction on average saves a rural dweller 10 yuan in transportation and food cost and 4 hours in transportation time, this service has saved the rural dwellers a total of 1.9 billion yuan and 760 million hours.

Looking ahead, there are still challenges and difficulties in improving the payment service environment in rural areas. The imbalances in input and output of the agriculture-supporting cash withdrawal services remain acute, and farmers still have a strong preference for cash settlement. Besides, the qualification of staff in the industry needs to be further improved, and the use of non-cash payment instruments has not been explored in-depth. It is difficult to make innovation in the payment services and products that are tailored to the need of the agricultural sector, rural areas and farmers. The policy support can be further enhanced. The risk management measures need to be improved. The PBC has summed up the existing achievements and experiences, solicited opinions and comments from a wide range of parties, analyzed and studied the difficulties and challenges in a systematic way, focused on improving the top-level design and hereby formulated the Guidelines.

The Guidelines comprise of 10 parts including objectives, basic principles and other parts, and put forward requirements for measures in the next stage in deepening the work to build rural payment service environment, i.e. deepening services for agriculture-supporting cash withdrawal service, optimizing bankcard services tailored for rural migrant workers, diversifying payment service providers, promoting non-cash payment, improving policy support system, enhancing risk management, strengthening training and outreach efforts, and the organization of implementation measures. First of all, the core will be how to deepen the agriculture-supporting cash withdrawal services. The cash withdrawal service points will be allowed to provide three additional service items, i.e. cash remittance, bank transfer and remittance, and agent fee payment service, to diversify the services and increase the usage of service points by the farmers.

Second, the guiding principle of striking a balance between seeking sustainable developments and offering concessional rates to farmers is defined for the service points. In particular, there is a requirement for the service points to waiver the service charge for the first cash withdrawal transaction in each month by rural elderly people who come to the service point to get their pension payments and agriculture-supporting government subsidies. Third, the Guidelines have encouraged the application of mobile phone payments and other new payment business in rural areas. Fourth, the Guidelines have once again stressed the requirements in training, public education and outreach, and risk management, to ensure the safe operation of rural payment services. Fifth, in accordance with the requirements to enhance policy support put forward by the State Council General Office in the Opinions On Stepping Up Financial Services to Support the Development of the Agricultural Sector, Rural Areas and Farmers, there will be measures to coordinate and work together with the local governments and relevant departments to provide necessary policy support for the improvement of rural payment service environment.

At the next stage, the PBC will join hands with other parties, follow the principle of providing services to the agricultural sector, rural areas and farmers, improve the role and function of government while supporting the market to play a decisive role, promote the implementation of the Guidelines to continue the improvement of agriculture-supporting payment services and the bankcard services tailored for rural migrant workers, diversify payment service providers, introduce payment and settlement account and non-cash payment instruments to a larger group of holders and users, support the extension of payment system network, and promote inclusive finance, the integration and balanced development of rural and urban areas.