China has lowered the threshold for financial institutions to open outlets in rural areas, a move to help attract more funds to the countryside.

The Chinese Government is encouraging banks and industry including the private sector to boost their rural investment, according to a rule issued on Friday by the China Banking Regulatory Commission (CBRC).

It urged commercial banks to establish more outlets in rural areas. Meanwhile, farmers and small businesses are also being encouraged to set up credit co-operatives, according to a statement issued by the CBRC.

In a bid to attract more funds, county-based banks in rural areas only require 3 million yuan (US$380,000) to be established. Banks based in rural towns need only 1 million yuan (US$127,000) to be set up, according to the rule.

Farmers and small rural businesses require at least 300,000 yuan (US$38,000) in registered capital in order to set up credit co-operatives in rural towns, while 100,000 yuan (US$12,700) is needed in villages, the regulator said.

Taking effect from Saturday, the new rules will first be implemented in the provinces of Sichuan, Gansu, Qinghai, Hubei, Jilin, and the Inner Mongolia Autonomous Region, before being introduced in the nation's more prosperous coastal regions.

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