A passer-by stops at Shandong Zaozhuang Hengtai Rural Cooperative Bank, a transitional entity between a rural credit cooperative and rural commericial bank. Wang Xiaotian / China Daily

As China continues the reform of rural credit cooperatives (RCCs), investment opportunities for foreign capital will increase, officials and analysts said.

"We expect more RCCs will be transformed into rural commercial banks after equity reform, and foreign investors are welcome to become strategic partners and make long-term investments," said Yin Youxiang, head of the rural financial service regulatory division of the cooperative finance supervision department of the China Banking Regulatory Commission (CBRC).

RCCs are local institutions that generally provide small loans to farmers, individual business owners and small local companies.

Calls for further reform of RCCs have increased as the rapid growth of emerging rural financial institutions - such as independent rural banks and lending companies - poses an increasing threat to RCCs' dominance of the rural market.

"RCCs acted like a catfish and stirred up the previous market structure. We must survive amid rising competition," said Song Wenxuan, deputy director of the China Banking Association and the head of the Shandong RCC Union.

In towns across Shandong province, where emerging institutions have their largest presence, RCCs only have about 20 percent of the market, compared with 50 to 60 percent in remote villages, said Song.

The Postal Savings Bank of China Co Ltd, which counts 24,000 rural outlets among its total of 37,000 outlets nationwide, could become a major rival for RCCs as it explores local business opportunities more vigorously, he said.