News Item (Sept 1995): China bank has small loans on offer to women


BEIJING, Sept 10 (Reuter) - Giving small loans to lift women out of poverty is a major issue at Beijing's world women's meeting and a remote district bank is setting trends in China, where credit is a monopoly of a Stalinist-style banking system.

An official of the central bank, the People's Bank of China, summed up the official attitude to ``microcredit,'' or lending to the very poor, in a country where market reform has swept many industries but banking remains the prerogative of the state.

``I have never heard about any kind of credit being given to women,'' said the People's Bank of China official. ``Commercial banks have to consider whether their loans can be repaid.'' However, one poor and backward district in northwestern China is experimenting with microcredit targeted at women and claims a high rate of success, and repayment.

A senior executive of the state-owned Agricultural Bank of China, one of China's big four policy banks, recommended wider implementation of the scheme, in defiance of entrenched official nervousness over loaning money outside the state system.

``Shanxi is the first... province to give cheap loans to rural women who live in poor counties to help them become better off,'' said Yan Dianshan, vice chairman of the Women's Federation of the northwestern province. ``We call the programme 'A Chain of Rings for Women To Shake Off Poverty Plan','' Yan said in a telephone interview from the provincial capital, Taiyuan

The programme was launched in 1989 in poverty-stricken Luliang district and the local branch of the Agricultural Bank agreed to extend 135,000 yuan ($16,265) worth of loans to women whose annual income was below 400 yuan ($48), among the poorest in the province, she said.

In 1992, the loans reached 500,000 yuan ($60,000) and other parts of the province began to follow Luliang's example. China says 70 million of its 800 million rural residents live below the poverty line and many are women. In 1995, the loans have already hit 7.8 million yuan ($939,000) to women whose annual income is under 680 yuan ($81), living in 50 areas designated as poverty districts in Shanxi. ``We usually do not give money directly to poor women,'' Yan said. ``We give them chicks, rabbits, piglets and other materials to make it easy for them to repay or we lend money to better-off women responsible for poverty relief work for poorer women.'' The loans are signed with the Agricultural Bank, given at preferential 2.4 percent interest and repaid in three years. Repayment rates are high, echoing experiences of Women's World Banking and Bangladesh's groundbreaking Grameen Bank.

The non-profit Women's World Banking (WWB) finds low-income women are the best credit risk in the world, president Nancy Barry said in an interview last week. ``Their repayment rate is 95 to 98 percent, better than that of large clients of commercial banks.'' Hua Ruoming, an executive of the Agricultural Bank, applauded the developments. ``We call on the government to set requirements on policy banks to help women,'' she said.

Barry said she was interested in expanding WWB into China but has been delayed because it can only affiliate itself with non-government, private, non-profit-making organisations not linked to a political party, almost impossible in China where the Communist Party controls all financial institutions. ``There are emerging structures in China that may well be good affiliates and we are very interested in exploring that and will be doing so in the coming year,'' Barry said.


Hari Srinivas - hsrinivas@gdrc.org
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