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MEASURES FOR THE ADMINISTRATION OF FOREIGN DEBTS OF FOREIGN-FUNDED BANKS IN CHINA

National Development and Reform Commission, People's Bank of China, and China Banking Regulatory Commission

Order of the National Development and Reform Commission, People's Bank of China, and China Banking Regulatory Commission

No.9

In order to intensify the overall management of foreign debts, effectively control the total amount of foreign debts, and standardize the administration on foreign debts of foreign-funded banks in China, the Measures for the Administration of Foreign Debts of Foreign-funded Banks In China are formulated upon the approval of the State Council, which are hereby promulgated and shall go into effect 30 days as of the day of promulgation.

Director of the National Development and Reform Commission Ma Kai

President of the People's Bank of China Zhou Xiaochuan

Chairman of the China Banking Regulatory Commission Liu Mingkang

May 27, 2004

Measures for the Administration of Foreign Debts of Foreign-funded Banks in China

Article 1

In order to promote the fair competition between Chinese-funded banks and foreign banks in China, effectively control the size of foreign debts, and prevent the risk of foreign debts, the present Measures are hereby formulated according to the Regulations of the People's Republic of China on the Administration of Foreign-funded Financial Institutions, Regulations of the People's Republic of China on the Management of Foreign Exchange and the relevant provisions on the administration of foreign debts,.

Article 2

The "Foreign-funded Banks" as mentioned in the present Measures refer to the wholly foreign-funded banks, the Chinese-foreign joint equity banks and the branches of foreign banks established within the territory of China in accordance with the Regulations of the People's Republic of China on the Administration of Foreign-funded Financial Institutions and the relevant laws and regulations.

Article 3

The state exercises total amount control over the foreign debts of foreign-funded banks in China. The foreign debts of a foreign-funded bank in China shall include the overseas loans, money borrowed from overseas banks, deposits of overseas banks, money under the transactions with overseas inter-banks and their subordinated institutions (debtor), non-resident deposits and other forms of foreign debts.

Article 4

The National Development and Reform Commission (hereinafter referred to as the NDRC), together with the China Banking Regulatory Commission (hereinafter referred to as the CBRC) and the State Administration of Foreign Exchange (hereinafter referred to as the SAFE) shall, in line with the need of national economic and social development, the status of international balance of payments and the capability for bearing foreign debts, as well as the status of assets and liabilities of foreign-funded banks in China and their needs for working capital, etc., properly make sure the total amount of foreign debts of foreign-funded banks in China and the structural regulation objectives of medium and long-term, and short-term foreign debts.

Article 5

Where a foreign-funded bank in China borrows medium and long-term foreign debts with the contractual period of over one year, the NDRC shall be responsible for the annual verification of the amount of foreign debts. As for short-term foreign debts with the contractual period of less than one year, the SAFE shall be responsible for the verification of the balance.

Article 6

Before the end of February each year, all the foreign-funded banks in China shall file applications to the NDRC or SAFE respectively for the amount of medium and long-term foreign debts and the short-term balance of foreign debts of the current year. In particular, the wholly foreign-funded banks and the Chinese-foreign joint equity banks shall file applications to the NDRC or SAFE level by level respectively through the branches of the NDRC or SAFE at the place where they have made their business registration. The branch of a foreign bank shall file an application directly to the NDRC or SAFE through its principal reporting bank in China. If it has no principal reporting bank, it shall file an application to the NDRC or the SAFE level by level through the branch of the NDRC or SAFE at the place where it has made the business registration.

Article 7

When applying for the annual total amount of foreign debts, a foreign-funded bank in China shall submit the following documents to the NDRC or the SAFE respectively:

1.

the application report of for borrowing medium and long-term, or short-term foreign debts, which shall include the operational status of the previous year, sources and application of capital, basis for the amount of foreign debts to be applied for and the intended use of the capital, etc..

2.

the document on the annual line of credit as granted to the debtors in China by their overseas headquarters or regional management departments.

3.

A wholly foreign-funded bank or Chinese-foreign joint equity bank shall provide the domestic consolidated balance sheet and profit and loss statement of the previous year to the CBRC. The branch of a foreign bank shall provide to the CBRC the balance sheet and profit and loss statement of the previous year of the branch as well as the consolidated balance sheet and profit and loss statement of the previous year of its operational branches in China . And

4.

The relevant certification documents in relation to the liquidity needs of the applicant or intended use of the capital.

Article 8

The NDRC and the SAFE shall, in light of the status on foreign debts borrowing of any foreign bank in China in the previous year, the annual line of credit as granted to the debtors in China by its overseas headquarter or regional management department, and the demand for domestic loan projects (medium and long-term foreign debts) and the liquidity needs (short-term foreign debts), respectively verify the amount of medium and long-term foreign debts and the balance of short-term foreign debts of the foreign-funded bank in China in the current year. The medium and long-term foreign debts newly borrowed by any foreign-funded bank in China in the current year may not exceed the quota verified by the NDRC. The balance of the short-term foreign debts at any given time in the current year may not exceed the balance verified by the SAFE.

Article 9

After the total amount of foreign debts is determined, the foreign bank in China may, in light of the need of business, apply to the NDRC or SAFE for making adjustment for once in the current year, and the NDRC or SAFE shall then decide on whether or not to grant approval according to the circumstances.

Article 10

The regulations on foreign exchange loans shall be applicable to the issuance of foreign exchange loans by an foreign-funded bank in China to an domestic institution . Except the outward documentary bill, the foreign-funded bank in China may not settle the foreign exchange for the foreign exchange loans issued to the domestic institution.

Article 11

The guarantee provided by a foreign-funded bank in China to foreign parties shall be administered as the overseas guarantee. The guarantee provided by a domestic institution to any foreign-funded bank in China for a domestic debtor shall be administered as the domestic guarantee.

Article 12

No foreign exchange may be settled for the foreign debt capital borrowed by any foreign-funded bank in China. And no foreign exchange may be purchased for repayment of the principal and interest of foreign debts. The repayment of principal and interest by a foreign-funded bank in China under the item of foreign debts does not require the approval of the SAFE.

Upon the approval of the SAFE, a domestic institution may choose a foreign-funded bank in China to open a special account for foreign debts.

Article 13

The SAFE shall be responsible for the statistics and monitoring of foreign debts and domestic foreign exchange debts of foreign-funded banks in China. The foreign-funded bank in China shall, within 5 working days at the beginning of each month, submit the statistical data of foreign debts to the branch of the SAFE at its registration place, and submit the relevant information on domestic foreign exchange loans to the local foreign exchange bureau in accordance with the relevant provisions on the domestic foreign exchange loans.

Article 14

The SAFE shall conduct on-site or off-site inspection on the borrowing of foreign debts and granting of foreign exchange loans on a regular or irregular basis. Those in violation of the provisions of the present Measures may be punished by the SAFE in accordance with the Regulations of the People's Republic of China on the Management of Foreign Exchange and the relevant laws and regulations.

Article 15

The power to interpret the present Measures shall reside in the National Development and Reform Commission and the People's Bank of China. In the case of any discrepancy between any other previous provision and the present Measures, the present Measures shall prevail.

Article 16

The present Measures shall go into effect 30 days as of the day of promulgation.

  National Development and Reform Commission, People's Bank of China, and China Banking Regulatory Commission 2004-05-27  


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