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Challenges: 2004 source out of date

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[[File:南京江宁路农村信用合作社_-_panoramio.jpg|thumb|A branch of Nanjing Rural Credit Cooperative Union]]
A '''rural credit cooperative''' (RCC) ({{zh|c=农村信用合作社}}) or ({{zh|s= 农村信用社|t= 農村信用社|p=nóngcūn xìnyòngshè}}) is a cooperative or credit union sanctioned by [[People's Bank of China]] to provide [[Credit (finance)|credit]] in the [[rural society of the People's Republic of China|rural areas of the People's Republic of China]].

== History ==
In the 1950s, a network of rural credit [[cooperatives]] was created. At this time, they were not commercial enterprises similar to banks, but rather channeled credit between the state and the [[people's commune]]s in rural areas.<ref>Kellee Tsai, "Imperfect Substitutes: The Local Political Economy of Informal Finance and Microfinance in Rural China and India" ''World Development'' 32:9 (September 2004): 1487–1507.</ref>

In the late 1970s, after [[economic reforms in China|economic reforms]] enabled some individual [[entrepreneurialism]] and the creation of [[collective]] enterprises, the RCCs began to function as grassroots banks that provided credit and [[savings]] accounts to families and collective enterprises. In the reform era, the RCCs were intended to serve as a means for the [[Agricultural Bank of China]] to funnel credit into rural areas. However, the RCCs were insufficient to meet the high demand for credit in these areas.<ref>Kellee Tsai, ''Back-Alley Banking: Private Entrepreneurs in China''(Ithaca, New York: Cornell University Press, 2002), 152.</ref>

Individual and enterprises often turn to other sources of credit, which range from [[rotating savings and credit association]]s to [[pawn shop]]s. However, these other forms are all illegal, although some are tolerated to a greater degree than others, and are tolerated in some locations more than in others. Commercial banks are legal, but since fewer than one percent of loans from state banks go to private entrepreneurs, they do not meet the credit needs of rural areas.<ref>Tsai (2002), 2.</ref>

Until 1996, the RCCs were supervised by the [[Agricultural Bank of China]]. In 1996, they were transferred to the [[People's Bank of China]].<ref>Tsai (2002), 152.</ref>

In July 1998, the rural credit [[foundation (nonprofit organization)|foundations]] (RCF) ({{zh|s= 农村合作基金会|t=農村合作基金會|p= nóngcūn hézuò jījīnhuì}}) were banned when the [[State Council of the People's Republic of China]] ({{zh|s=国务院|t=國務院|p=guowuyuan}}) issued the "Provisions on the Cancellation of Illegal Financial Institutions and Activities". This left the RCCs as the only legal financial institution (other than banks) that served rural enterprises and individuals. As of 1998, when the RCFs were banned, there were approximately 44,000 [[towns of China|township-level]] RCCs and 280,000 village-level RCC branches.<ref name="Tsai 2004, 1489">Tsai (2004), 1489.</ref>

Since 1998, many of the RCCs have gradually been transformed into rural commercial banks (RCBs). The first [[foreign portfolio investment|foreign investment]] in an RCB was allowed in 2006, when [[Rabobank]] and the [[International Finance Corporation]] (the private sector arm of the [[World Bank]]) acquired stakes in the [[United Rural Cooperative Bank of Hangzhou]].<ref>[https://web.archive.org/web/20110523225756/http://www.ifc.org/ifcext/media.nsf/content/SelectedPressRelease?OpenDocument&UNID=AC6A22C0142C456D852571A80057AD5A IFC News – Press Releases & Features – Press Release]</ref>

== Challenges ==
Due to a high volume of [[non-performing loans]], many of the RCCs are technically [[insolvent]]. Since 1998, central banking authorities have injected approximately US$4 billion into [[recapitalization]] the RCCs, and have considered other measures for improving the performance of the RCCs.<ref name="Tsai 2004, 1489"/>{{Needs update|date=January 2025}}

Although the RCCs are gradually being transformed into independent commercial banks (RCBs), they are still not immune from government requests to make [[policy]] loans (loans issued for political reasons, such as the desire to support certain politically important industries or firms, rather than because the firm is an attractive candidate for a loan).<ref>Tsai (2002), 208.</ref>

== See also ==
*[[Economy of China]]
*[[Chinese financial system]]
*[[Banking in China]]

== Notes ==
{{reflist}}

{{Economy of China}}

[[Category:Credit unions of China]]
[[Category:Finance in China]]
[[Category:Economic history of the People's Republic of China]]
[[Category:People's Bank of China]]
[[Category:Rural economics]]
[[Category:Rural development in China]]

Rural credit cooperative - Revision history

imported>Pieceofmetalwork: /* Challenges */ 2004 source out of date