Bank clerks on their way to Ngari prefecture in the Tibet autonomous region to visit clients on horseback. They travel to agree loans or collect repayments no matter what the weather is like. The region is 4,500 meters above sea level. [Photo/China Daily]

Credit rating policy rolled out by Agricultural Bank of China has allowed farmers to expand their operations and increase annual incomes

Jampa Norbu lives in a village in Lhunzhub county, which is 60 kilometers away from Lhasa, the capital of the Tibet autonomous region. He has a family of seven, 8.24 acres of land and nine cattle. Most of the family's income comes from farming highland barley and wheat.

In 2011, he took out a three-year loan of 30,000 yuan ($4,830) from the Agricultural Bank of China Ltd to buy farm machinery. Ever since, his income has increased 20 percent annually on average to 60,000 yuan.

After he paid it off last year, he applied for another loan of up to 200,000 yuan. Jampa Norbu hopes to use the money to buy 15 more cows and build a cattle farm along with three poverty-stricken families, who will work with him.

"I expect to recover the investment in two years by selling more than 9.7 liters of milk a day as well as breeding calves," he said. "The government also gives us fodder subsidies of more than 1,000 yuan per cow per year."

Back in 2003, the Agricultural Bank of China Ltd, the nation's fourth-largest lender by assets, introduced a "character loan" service in Tibet.

Local bank officials visit each family in the region and conduct a simple survey. This involves their financial situation, their reputation and business prospects.

With the help of the village chief and township government, the bank rates each household's credit at different levels.

The families that are granted a top-level "diamond card" can apply for loans of up to 200,000 yuan, at the poverty alleviation rate of 1.08 percent, without putting up collateral. Those families receiving the lowest-level "bronze card" are allowed to borrow no more than 20,000 yuan.

"Before the bank introduced the 'character loan' service to Tibet, it was hard for many farmers in this region to receive bank loans because they lacked sufficient collateral," He Qin, head of Lhunzhub county sub-branch of Agricultural Bank, said.

Obviously, some of the loans borrowed by farmers and herders are often small, just 1,000 yuan, according to Migmar Wangdu, manager of Agricultural Bank's Tibet branch.

"This makes it cost-ineffective for the bank to conduct pre-loan investigations and post-loan reviews for each one," he said.

Twelve years after it was launched, 95 percent of the families in Tibet have a "character loan" card. As of June 30, the outstanding character loans in the region were more than 15 billion yuan.

They have been used to expand tourism services, buy machinery and even finance construction projects. The nonperforming loan ratio of Agricultural Bank's Tibet branch was only 0.49 percent by the end of May.