The Innovation Research Of Rural Banking Legal System

Rural banking, which plays an important role in the rural financial system, is an essentialpart of the Chinese financial system. As a newcomer to the financial industry, rural bankinfused new life and energy into the rural financial markets which has been abandoned for itslow profit by other financial institutions. Lacking of legislation on this issue, rural bank hasn’tbeen admitted by law, rights and obligations of it is not clear now. As a market subject, itsautonomy and equal rights were being infringed frequently. It is critical problem for ruralbanks on how to keep the rural bank’s balance between agriculture-related loans and itssustainable competitive advantage, how to keep its safety when rural bank attract more privatecapital into rural banks, how to keep it independence, how to fight for equal rights betweenrural banks and other banks.In order to get the accurate legal status of rural banks and theboundary of its rights and obligations, the study on that starts from the definition of rural bank.We paid much attention to the entering system, the corporate governance, the loans of ruralbanking. Specifically, the limit on entering system of rural banking that the main sponsorshould be a bank should be cancelled. We can take the standard that the entering system ofcommercial bank used in lieu of that. The rule that shareholders who want to be thecontrolling shareholder should establish bank holding company at first could be adopted as acomplement. When talking about the corporate governance of rural bank, the standard of thecorporate structure should be stricter than ordinary corporation but easier than commercialbank. When it comes to money lending business of rural banking, the small business lendingand agriculture-related loans should get more publicity. Relationship lending could beintroduced into rural banking to help small business to approach loans. Besides, the tradesystem of agricultural related loan could be structured to redistribute the duty between ruralbanks and commercial banks fairly. With this system, rural banks are encouraged to carry outobligations of offering agriculture related loan and ensure sustainable development at thesame time.