ABSTRACT
Since 2003, the overall reform of rural credit cooperatives (RCCs) has been a success to a certain extent. A part of RCCs became rural cooperative banks and rural commercial banks. But the reform approach is seriously government-centered, not well respecting RCCs’own autonomy. After the restructuring, the problems with“insider control” and “outsider control” persist within RCCs, rural cooperative banks and rural commercial banks, and the relationship between the responsibilities, rights, and interests accrued to different stakeholders are unbalanced and distorted. The 2010 government policy requires that all rural credit cooperatives and rural cooperative banks are to be transformed into rural commercial banks, while the provincial associations of credit cooperatives which have the task of managing RCCs, rural cooperative banks and rural commercial banks within their respective provinces should focus on the performance of their service functions. The direction of such policy is not wrong since the RCCs and rural cooperative banks are not able to comply with the principles of cooperatives, and the provincial associations have no right to manage these rural financial institutions, but the government needs to respect the autonomy of rural credit cooperatives and rural cooperative banks themselves. Only taking this step would straighten out the distorted relationship between the responsibility, rights and interests accrued to different stakeholders within RCCs and rural cooperative banks. In addition, there is a huge space for the establishment of new rural credit cooperatives in their true sense. One should not refuse to take this step because of the existence of a large number of RCCs and rural cooperative banks which are not able to operate in accordance with the principles of cooperatives.
