• Document Number：No. 45 [2015] of the State Council
• Area of Law： Land Banking & Finance
• Level of Authority： Regulatory Documents of the State Council
• Date issued：08-10-2015
• Effective Date：08-10-2015
• Issuing Authority： State Council
• Status： Effective

Guiding Opinions of the State Council on Implementing the Pilot Programs of Loans with Mortgage of the Right to Contractual Operation of Rural Land and Farmers' Housing Property Rights
(No. 45 [2015] of the State Council)
The people's governments of all provinces, autonomous regions, and municipalities directly under the Central Government; all ministries and commissions of the State Council; and all institutions directly under the State Council:
For purposes of further deepening rural financial reform and innovation, increasing financial support for “agriculture, rural areas, and farmers,” directing the orderly circulation of the right to contractual operation of rural land, prudently and reliably promote the pilot programs of the mortgage, guarantee, and transfer of farmers' housing property rights, and effectively completing the pilot programs of loans with mortgage of the right to contractual operation of rural land (refer to “arable land”) and farmers' housing property rights (hereinafter collectively referred to as the “two rights”), the opinions are hereby offered as follows.
I. General Requirements
1. Guiding Thought.
You shall fully implement the spirit of the 18th National Congress of the Communist Party of China, and the Third and Fourth Plenary Sessions of the 18th CPC Central Committee; thoroughly implement the decisions and deployments of the CPC Central Committee and the State Council; according to the relevant requirements on separation of such three rights as ownership, contracting right, and right to operation, and starting from the implementation of usufruct of rural land and granting more property rights to farmers, deepen rural financial reform and innovation, reliably and orderly provide loan services with mortgage of the “two rights;” effectively revitalize rural resources, funds, and assets, increase capital investment in medium- and long-term and large-scale agricultural production; provide experience and models to the steady promotion of the reform of the rural land system; and promote farmers' income increase and the accelerated development of modern agriculture.
2. Basic Principles.
First, legally and orderly. The pilot programs of loans with mortgage of the “two rights” shall, with lawfully recognized evidence and in compliance with the Land Administration Law, Urban Real Estate Administration Law, and other relevant laws, regulations and policy requirements, firstly be conducted within the approved scope and be steadily promoted when experience of the pilot programs is accumulated. Where relevant articles of law violated are involved, an application shall be submitted to the Standing Committee of the National's People Congress for authorization for suspended implementation in the pilot areas.
Second, free will. The will of farmers shall be fully respected; and applications for loans with mortgage of the “two rights” shall be voluntarily filed by farmers and other rural business entities, to ensure that farmers are true informed players, participants, and beneficiaries. Mortgage of the right to operation of circulated land shall be subject to the consent of contracted farmer households and mortgage shall only be limited to the income within the term of circulation. Financial institutions shall, on the basis of sustainable financial standing and in accordance with the relevant provisions, independently provide loans with mortgage of the “two rights.”
Third, steady promotion. Under the premise of protecting the lawful rights and interests of farmers, the relationship among farmers, rural collective economic organizations, financial institutions, and governments shall be handled appropriately; and the pilot programs of loans with mortgage of the right to contractual operation of rural land and the pilot programs of the mortgage, guarantee, and transfer of farmers' housing property rights shall be prudently and steadily promoted.
Fourth, controllable risks. The bottom line of no change in the public land ownership system, no excess of the arable land minimum, and no damage to farmers' interests shall be guarded. Supporting policies on the confirmation, registration and issuance of certificates, establishment of circulation platforms, risk compensation, and collaterals disposal mechanism, among others for the pilot areas shall be improved; and risks shall be prevented, controlled and mitigated, to ensure smooth and steady implementation of the pilot work.
II. Pilot Tasks
(1) Endowing financing function to mortgage of the “two rights” and protecting the farmers' rights and interests on land. On the basis of preventing risks and complying with relevant laws and regulations, the reform of rural land system, and other policies, the pilot program of loans with mortgage of the “two rights” shall be steadily and orderly implemented. System building shall be strengthened. Financial institutions shall be directed and urged to always regard the effective safeguard, achievement, and development of farmers' rights and interests on land as the starting point and objective of pilot reform, realize the financing function of the mortgage of the “two rights,” clarify the loan objects, purposes, product design, evaluation of mortgage value, disposal of collateral, and other key business points, revitalize the property nature of the usufruct of farmers' land, and increase financial support for “agriculture, rural areas, and farmers.”
(2) Promoting the innovation on rural financial products and service modes to strengthen rural financial services. Financial institutions shall, in combination with the attribution of the “two rights,” intensify support for innovation on loan interest rate, term, credit line, guarantee, risk control, and other respects, simplify the loan management processes, steadily promote loans with mortgage of the “two rights,” and feasibly meet the effective needs of farmers and other rural business entities on financial services. Financial institutions shall be encouraged to grant medium and long-term loans within the remaining period of the right to contractual operation of rural land and effectively increase medium- and long-term credit for agricultural production. Lending to rural business entities with appropriate business scale shall be encouraged.
(3) Establishing the collateral disposal mechanism and effectively providing risk guarantee. Where mortgage needs to be realized as borrowers fail to pay due debts or any circumstances agreed by the parties occur, financial institutions shall be allowed to take various ways to dispose of collateral according to the law, under the premise of guaranteeing farmers' contracting rights and basic housing rights. Collaterals disposal measures shall be improved, to ensure that banks granting loans may smoothly realize mortgage when borrowers fail to pay due debts or any circumstances agreed by the parties occur. Provisions on loans with mortgage of farmers' housing property rights (including right to use homestead land) different from those on commercial housing shall be developed. The ways and approaches of realizing the rights and interests of homestead land in mortgage guarantee of farmers' housing property rights shall be explored, to safeguard the lawful rights and interests of the mortgagee. The transferee shall, in principle, dispose of collaterals of loans with mortgage of farmers' housing property rights within the scope specified by relevant laws and regulations and the State Council.
(4) Improving the supporting measures to provide basic support. Pilot areas shall promote the confirmation, registration and issuance of certificates for right to contractual operation of rural land, right to use homestead land, and farmers' housing property rights in an accelerated manner, and explore the confirmation, registration and issuance of certificates for right to contractual operation of rural land obtained through circulation. Mortgage shall be jointly established on the right to use homestead land and the housing property rights, for farmers' housing property rights mortgaged. In accordance with the pilot work deployments determined by the CPC Central Committee and the State Council for the reform of the homestead system, a mechanism of paid transfer of the right to use homestead land shall be explored and established. Competent departments shall be relied on for establishing and improving a multi-level connected rural land property rights trading platform, establishing a professional service mechanism for mortgage, transfer, and assessment of the “two rights,” and supporting the use of the right to contractual operation of rural land that circulates in a variety of ways in mortgage. A rural credit system shall be established and improved, to effectively mobilize and strengthen the enthusiasm of financial institutions in supporting agriculture.
(5) Intensifying support and coordination, to improve the effects of the pilot programs. The People's Bank of China (“PBC”) shall support financial institutions in actively and steadily participating in the pilot programs and increase relending for qualified rural financial institutions to support the development of agriculture. Banking regulatory authorities shall study differentiated regulatory policies, reasonably determine the calculation rules and incentive policies on capital adequacy ratio, loan classification, and other respects, and support financial institutions in providing loans with mortgage of the “two rights.” Pilot areas shall, in light of reality, take interest subsidies, development of government-supported guarantee companies, provision of guarantee through the rural land property rights trading platform, establishment of risk compensation funds, and other ways, to establish a risk mitigation and compensation mechanism for loans with mortgage of the “two rights.” Insurance regulatory authorities shall further improve the agricultural insurance system, vigorously promote agricultural insurance and rural housing insurance, expand insurance coverage scope, and fully maximize the role of insurance in risk guarantee.
III. Organization and Implementation
(1) Strengthening organization and leadership. The PBC shall, in conjunction with the Office of the Central Rural Work Leadership Group, the National Development and Reform Commission, the Ministry of Finance, the Ministry of Land and Resources, the Ministry of Housing and Urban-Rural Development, the Ministry of Agriculture, the State Administration of Taxation, the State Forestry Administration, the Legislative Affairs Office, the China Banking Regulatory Commission, the China Insurance Regulatory Commission, and other entities, and according to the assignment of responsibilities, establish a Leadership Group for the Pilot Programs of Loans with Mortgage of the Right to Contractual Operation of Rural Land and a Leadership Group for the Pilot Programs of Loans with Mortgage of Farmers' Housing Property Rights (hereinafter collectively referred to as the “Leadership Groups”), effectively implement the various requirements of the CPC Central Committee and the State Council on the pilot programs of loans with mortgage of the “two rights,” direct local people's governments to implement pilot programs according to these Opinions, and effectively complete special statistics, follow-up guidance, assessment summary, and other relevant work. The Office of the Leadership Groups shall be established in the PBC.
(2) Selecting pilot areas. The pilot programs of loans with mortgage of the “two rights” shall be conducted in the administrative areas at the county (city and district) level. Pilot programs of loans with mortgage of the right to contractual operation of rural land shall be mainly conducted in pilot rural reform areas, modern agricultural demonstration areas, and other areas where rights to contractual operation of rural land are circulated effectively; and pilot programs of loans with mortgage of farmers' housing property rights shall, in principle, be conducted in the pilot areas determined by the Ministry of Land and Resources as the leading department for the reform of homestead system. Provincial people's governments shall, under the principles of closed operation and controllable risks, recommend pilot counties (cities and districts) to the Office of the Leadership Groups, and implement pilot programs after examination and determination by the Leadership Groups. All counties (cities and districts) may, in light of local reality, respectively or concurrently apply for pilot programs of loans with mortgage of the right to contractual operation of rural land and pilot programs of loans with mortgage of farmers' housing property rights.
(3) Strictly following the requirements for pilot programs. Pilot areas for loans with mortgage of the “two rights” shall satisfy the following conditions: first, there are high rate of confirmation, registration and issuance of certificates for right to contractual operation of rural land, right to use homestead land, and farmers' housing property rights, a sound rural property rights circulation and trading market, public and standardized transactions, and favorable basis and supporting conditions; second, farmers therein have strong will for land circulation and there are favorable momentum of appropriate scale agricultural operations and scale economies effect; and third, there are favorable rural credit environment and perfect supporting policies.
(4) Standardizing pilot operation. The PBC and the China Banking Regulatory Commission (“CBRC") shall, in conjunction with relevant entities and according to these Opinions, issue administrative measures on pilot programs of loans with mortgage of the right to contractual operation of rural land and administrative measures on pilot programs of loans with mortgage of farmers' housing property rights. Banking financial institutions shall, in accordance with these Opinions and the administrative measures on loans with mortgage of the “two rights” developed by financial regulatory authorities, establish corresponding credit management system and develop detailed rules on implementation thereof. A pilot work team shall be established in pilot areas. The conditions for the pilot programs shall be strictly implemented. Specific implementation advices and supporting policies shall be developed and submitted to the Leadership Groups for recordation. Loans with mortgage of the right to operate forest land and loans with mortgage of the right to operate grassland may be governed by these Opinions, mutatis mutandis.
(5) Effectively completing assessment and summary. Experience of pilot programs shall be diligently summarized; suggestions on developing and amending to relevant laws and regulations, and policies shall be offered in a timely manner; and the amendment to and improvement of relevant laws and regulations shall be promoted in an accelerated manner. The PBC shall take the lead in being responsible for tracking, supervising, and directing the work of pilot programs, and conducting annual assessment. Pilot counties (cities and districts) shall submit summary reports and policy suggestions and the provincial people's governments shall submit them to the Leadership Groups. The Leadership Groups shall form national pilot programs work reports and offer relevant policy suggestions. All works of the pilot programs shall be completed before the end of 2017.
(6) Obtaining legal authorization. Where a pilot program in violation of Article 184 of the Property Law of the People's Republic of China, Article 37 of the Guarantee Law of the People's Republic of China, and other relevant articles of law, an application shall be submitted by the State Council according to the procedures to the Standing Committee of the National's People Congress for authorization that allows suspension of implementation of relevant articles of law during the pilot period in the pilot areas.
State Council
August 10, 2015