(Adopted at the 50th Executing Meeting of the State Council on December 12, 2001,promulgated by Decree No.340 of the Premier of the People's Republic of China on December 20, 2001, and effective on February 1, 2002)
Chapter I General Provisions
Article 1
For the purposes of suiting the needs of opening to the outside world and economic development, strictly and soundly controlling foreign-funded financial institutions and promoting a smooth progress of the banking industry, this Regulation is formulated.
Article 2
In this Regulation, foreign-funded financial institutions mean the following financial institutions established and managed in the territory of China upon approval and under the provisions of relevant laws and regulations of the People's Republic of China:
1. Foreign capital banks with their head offices in the territory of China (hereinafter cited as the sole-funded bank);
2. Foreign bank branches in the territory of China (hereinafter cited as the foreign bank branch);
3. Joint-funded banks in the territory of China managed by foreign financial institutions together with Chinese companies or enterprises (hereinafter cited as the joint-funded bank);
4. Foreign-funded finance companies with their head offices in the territory of China (hereinafter cited as the sole-funded finance company); and
5. Joint-funded finance companies in the territory of China managed by foreign financial institutions together with Chinese companies or enterprises (hereinafter cited as the joint-funded finance company).
Article 3
Foreign-funded financial institutions must comply with laws and regulations of the People's Republic of China, and may not prejudice the social and public interests of the People's Republic of China.
Laws of the People's Republic of China shall protect lawful business activities and legitimate interests of foreign-funded financial institutions.
Article 4
The People's Bank of China shall be the competent authority of administering and supervising foreign-funded financial institutions; its branches shall impose the routine supervision and administration on foreign-funded financial institutions within their respective jurisdictions.
Chapter II Establishment and Registration
Article 5
The registered capital of the sole- or joint-funded bank shall be the convertible money equivalent to 300 million RMB yaun as its minimum limit. The registered capital of the sole- or joint-funded finance company shall be the convertible money equivalent to 200 million RMB yuan as its minimum limit. The registered capital shall be the capital paid in.
The working capital of the foreign bank branch shall be the convertible money equivalent to not less than 100 million RMB yuan rendered gratis by its head office.
According to the business scope of foreign-funded financial institutions and the need of prudential control, the People's Bank of China may raise the minimum limit of the registered or working capital, and shall specify the amount of RMB therein.
Article 6
If establishing the sole-funded bank or finance company, the applicant shall satisfy the following conditions:
1. Being a financial institution;
2. Having a representative office in the territory of China in more than two years;
3. Having total assets of not less than US $ 10 billion at the end of the year prior to his application;
4. Having a sound system for financial supervision and administration in the country or region to which he belongs, and being effectively controlled by the competent authorities of that country or region;
5. Having acquired the consent from the competent authority of the country or region to which he belongs for his application; and
6. Satisfying other prudential conditions specified by the People's Bank of China.
Article 7
If establishing the foreign bank branch, the applicant shall satisfy the following conditions:
1. Having a representative office in the territory of China in more than two years;
2. Having total assets of not less than US $ 20 billion at the end of the year prior to his application and the capital sufficiency rate may not be less than 8%;
3. Having a sound system for financial supervision and administration in the country or region to which he belongs, and being effectively controlled by the competent authorities of that country or region;
4. Having acquired the consent from the competent authority of the country or region to which he belongs for his application; and
5. Satisfying other prudential conditions specified by the People's Bank of China.
Article 8
If establishing the joint-funded bank or finance company, the applicant shall satisfy the following conditions:
1. The foreign party shall be a financial institution;
2. The foreign party has a representative office in the territory of China;
3. The foreign party shall have total assets of not less than US $ 10 billion at the end of the year prior to his application;
4. The country or region to which the foreign party belongs shall have a sound system for financial supervision and administration, and the foreign party is effectively controlled by the competent authorities of that country or region;
5. The foreign party has acquired the consent from the competent authority of the country or region to which he belongs for his application; and
6. Satisfying other prudential conditions specified by the People's Bank of China.
Article 9
When intending to establish the sole-funded bank or finance company, the applicant shall file a request in writing with, and submit the following materials to, the People's Bank of China:
1. The written request for the sole-funded bank or finance company, it shall contain: name, registered capital and types of business of the sole-funded bank or company intended, etc.;
2. The feasibility study report;
3. The articles of association of the sole-funded bank or company intended;
4. The business license (its copy) of the applicant and the written opinion on his request issued by the competent authorities of the country or region to which he belongs;
5. Annual reports of the applicant in the last three years; and
6. Other materials required by the People's Bank of China.
Article 10
When intending to establish the foreign bank branch, the head office of the foreign bank shall file a request in writing with, and submit the following materials to, the People's Bank of China:
1. The written request signed by the legal representative, it shall contain: name of the foreign bank branch intended, amount of the working capital rendered gratis by the head office, and types of business intended, etc.;
2. The feasibility study report;
3. The business license (its copy) of the applicant and the written opinion on its request issued by the competent authorities of the country or region to which the applicant belongs;
4. Annual reports of the applicant in the last three years; and
5. Other materials required by the People's Bank of China.
Article 11
When intending to establish the joint-funded bank or finance company, all the parties thereto shall jointly file a request in writing with, and submit the following materials to, the People's Bank of China:
1. The written request for the joint-funded bank or finance company, it shall contain: name of the joint-funded bank or finance company intended, names of all the parties, amount of the registered capital, contributions of all the parties, and types of business intended, etc.;
2. The feasibility study report;
3. The contract and articles of association of the joint-funded bank or finance company intended;
4. The business license (its copy) of the foreign party and the written opinion on his request issued by the competent authorities of the country or region to which the foreign party belongs;
5. Annual reports of the foreign party in the last three years;
6. Relevant materials about the Chinese party; and
7. Other materials required by the People's Bank of China.
Article 12
Materials listed in Articles 9, 10 and 11 of this Regulation shall be accompanied by the translations in the Chinese language if they are in foreign languages, with the exception of annual reports.
Article 13
The People's Bank of China shall make a preliminary examination over the request for establishing a foreign-funded financial institution and within six months from the date of receipt of all materials of request, make a decision of acceptance or denial. If deciding to accept, it shall issue an official form of application to the applicant; and if deciding to deny, it shall notify the applicant and give the reasons in writing.
If, under the exceptional situation, the People's Bank of China cannot finish the preliminary examination and make the decision of acceptance or denial within the limit of time specified in the paragraph above, it may extend the limit of time appropriately and shall make known to the applicant. The extension, however, may not exceed three months.
Article 14
The applicant shall complete preparations within six months from the date of receipt of the official form of application. If he fails to complete preparations as scheduled but has justified grounds, the period for preparations may be extended for three months upon approval by the People's Bank of China. If he still fails to complete preparations within the extended period, the decision of acceptance made by the People's Bank of China shall automatically become invalid. After preparations, the applicant shall submit the official form of application he filled out, together with the following documents, to the People's Bank of China for examination and approval:
1. The name list and curricula vitae of the principal officers responsible for the foreign-funded financial institution intended;
2. The letter of authorization to the principal officers responsible for the foreign-funded financial institution intended;
3. The capital verification certificate issued by the official verification agency;
4. Materials in respect of safe and protective measures and other facilities for the business;
5. In establishing the foreign bank branch, the guarantee of the head office for assuming liabilities for taxes and debts of the branch; and
6. Other documents required by the People's Bank of China.
Article 15
The People's Bank of China shall make the decision of approval or disapproval within two months from the date of receipt of all the documents of application. If deciding to approve, it shall issue the banking business permit; and if deciding to disapprove, it shall notify the applicant and give the reasons in writing.
Article 16
After obtaining the approval for the establishment of the foreign-funded financial institution, the applicant shall accomplish registration at the industrial and commercial administration authority and obtain the business license according to the banking business permit.
Chapter III Business Scope
Article 17
Within the business scope approved by the People's Bank of China, the sole-funded bank, foreign bank branch or joint-funded bank may, partly or wholly, carry on the following types of business according to law:
1. To take deposits from the members of the public;
2. To make short-, medium- and long-term loans;
3. To accept and discount notes;
4. To trade in government bonds, financial bonds and other foreign currency securities other than stocks;
5. To offer credit service and guarantee;
6. To make internal and external settlements;
7. To trade in foreign exchanges directly or as the agent;
8. To make foreign currencies conversion;
9. To make inter-bank loans;
10. To offer bank cards service;
11. To offer safe custody service;
12. To offer credit investigation and consultant service; and
13. To carry on other types of business approved by the People's Republic of China.
Article 18
Within the business scope approved by the People's Bank of China, the sole- or joint-funded finance company may, partly or wholly, carry on the following types of business according to law:
1. To take deposits with the sum of each deposit not less than one million RMB yuan or in the convertible money equivalent to that sum and with the term not less than three months;
2. To make short-, medium- and long-term loans;
3. To accept and discount notes;
4. To trade in government bonds, financial bonds and other foreign currency securities other than stocks;
5. To offer guarantee;
6. To trade in foreign exchanges directly or as the agent;
7. To make inter-bank loans;
8. To offer credit investigation and consultant service;
9. To offer foreign exchange trust service; and
10. To carry on other types of business approved by the People's Bank of China.
Article 19
Under the relevant provisions, the People's Bank of China shall determine the scope of regional areas and service targets for RMB business of foreign-funded financial institutions.
Article 20
A foreign-funded financial institution applying for RMB business shall satisfy the following conditions:
1. Having its operation in the territory of China in more than three years prior to its application;
2. Having profits in the last two consecutive years prior to its application; and
3. Satisfying other prudential conditions specified by the People's Bank of China.
Article 21
A foreign-funded financial institution desiring to start a new type of business within the business scope approved by the People's Bank of China shall file an application in writing with the People's Bank of China prior to the start of the new type of business. The People's Bank of China shall make the decision of approval or disapproval within 60 days from the date of receipt of the document of application. If deciding to disapprove, the People's Bank of China shall notify the applicant and give the reasons in writing.
Chapter IV Supervision and Administration
Article 22
Foreign-funded financial institutions shall determine their interest rates of deposits and loans as well as all service charges under the provisions of the People's Bank of China.
Article 23
Foreign-funded financial institutions carrying on the business of deposits shall maintain the deposit reserves in the local branches of the People's Bank of China. The ratio thereof shall be specified by the People's Bank of China and modified according to the need.
Article 24
The amount of 30% of the working capital of the foreign bank branch shall be maintained in the form of interest-earning assets as designated by the People's Bank of China, including the deposits in the bank designated by the People's Bank of China.
Article 25
The capital sufficiency rate of the sole- or joint-funded bank or finance company may not be less than 8%.
Article 26
The credit balance of the sole- or joint-funded bank or finance company to one enterprise or its affiliated business may not exceed 25% of its capital, except as approved by the People's Bank of China.
Article 27
The fixed assets of the sole- or joint-funded bank or finance company may not exceed 40% of its owners' equity.
Article 28
The ratio of RMB in the capital of the sole- or joint-funded bank or finance company to that in its risk assets may not be less than 8%.
The ratio of RMB in the sum of the working capital, reserves and other funds of the foreign bank branch to that in its risk assets may not be less than 8%.
Under the relevant provisions, the People's Bank of China shall modify the ratios specified in the two paragraphs above step by step.
Article 29
Foreign-funded financial institutions shall guarantee the liquidity of their assets. The ratio of the liquid assets balance to the liquid liability balance may not be less than 25%.
Article 30
The total amount of foreign exchange deposits taken in the territory of China by foreign-funded financial institutions may not exceed 70% of their total foreign exchange assets in the territory of China.
Under the relevant provisions, the People's Bank of China shall modify the ratio specified in the paragraph above step by step.
Article 31
Foreign-funded financial institutions shall have the reserves for doubtful (bad) accounts as required.
Article 32
Foreign-funded financial institutions shall employ Chinese certified public accountants and obtain approval from local branches of the People's Bank of China.
Article 33
Under any of the following situations, foreign-funded financial institutions must obtain approval from the People's Bank of China and shall accomplish due registration at the industrial and commercial administration authorities according to law.
1. To set up branches;
2. To adjust or transfer the registered capital, or to increase or decrease the working capital;
3. To change the institution name or business site;
4. To adjust the business scope;
5. To change the shareholder who holds more than 10% of the total amount of capital or shares;
6. To amend the articles of association;
7. To change the superior managerial staffs; or
8. To have any other situations specified by the People's Bank of China.
Article 34
Foreign-funded financial institutions shall submit financial statements and related materials to the People's Bank of China and its branches as required.
Article 35
The People's Bank of China and its branches shall be entitled, at regular internals or at any time, to inspect and audit the deposits, loans, settlements, doubtful accounts of foreign-funded financial institutions, to require foreign-funded financial institutions to submit relevant documents, materials and written reports within the specified period, and to punish and treat the irregular conducts of foreign-funded financial institutions according to law.
Article 36
The People's Bank of China and its branches shall be entitled to require foreign-funded financial institutions to work out the business rules and to establish and improve the systems for business management, cash management, safety and prevention according to the provisions.
Article 37
Foreign-funded financial institutions shall accept the supervision and inspection imposed by the People's Bank of China and its branches according to law and truthfully submit relevant documents, materials and written reports, and may not have any refusal, obstruction or concealment.
Chapter V Dissolution and Liquidation
Article 38
If a foreign-funded financial institution intends to terminate its business activities on its own, it shall file an application in writing with the People's Bank of China 30 days prior to the termination. After examination and approval by the People's Bank of China, it shall be dissolved and enter into liquidation.
Article 39
If a foreign-funded financial institution is unable to pay its due debts, the People's Bank of China may order it to stop its business and to make consolidation. If it restores its paying ability within the period of consolidation and requires the restart of its business, it must file an application for restarting its business with the People's Bank of China. If it fails to restore its paying ability at the expiration of consolidation, it shall enter into liquidation.
Article 40
If a foreign-funded financial institution is terminated due to dissolution, revocation or bankrupt declared according to law, its liquidation shall be governed by reference to the provisions of relevant laws and regulations of China.
Article 41
After liquidation, the foreign-funded financial institution shall accomplish the cancellation registration at the original registration authority within the specified limit of time.
Chapter VI Legal Responsibility
Article 42
If, without approval by the People's Bank of China, a foreign-funded financial institution is established or illegally carries on banking business activities, the People's Bank of China shall ban it; and concurrently, its criminal responsibility shall be demanded according to law under the provisions of the Crime Law on crimes of illegally establishing financial institutions, crimes of illegally taking deposits from the members of the public or other crimes; if the criminal punishment is inappropriate, the People's Bank of China shall confiscate the ill-gotten gains therefrom and impose a fine exceeding one time but not exceeding five times the ill-gotten gains thereon; if the ill-gotten gains has not been received or is less than 100,000 yuan, the People's Bank of China shall impose a fine exceeding 100,000 yuan but not exceeding 500,000 yuan thereon.
Article 43
If a foreign-funded financial institution carries on banking business activities beyond the scope of business, regional area or service target approved by the People's Bank of China, its criminal responsibility shall be demanded according to law under the provisions of the Crime Law on crimes of illegal operations or other crimes; if the criminal punishment is inappropriate, the People's Bank of China shall give a warning thereto, confiscate the ill-gotten gains therefrom and impose a fine exceeding one time but not exceeding five times the ill-gotten gains thereon; if the ill-gotten gains has not been received or is less than 100,000 yuan, the People's Bank of China shall impose a fine exceeding 100,000 yuan but not exceeding 500,000 yuan thereon.
Article 44
If, within the business scope approved by the People's Bank of China, a foreign-funded financial institution starts a new type of business without approval, the People's Bank of China shall order it to stop the new type of business, confiscate the ill-gotten gains therefrom and impose a fine exceeding one time but not exceeding three times the ill-gotten gains thereon; if the ill-gotten gains has not been received or is less than 50,000 yuan, the People's Bank of China shall impose a fine exceeding 50,000 yuan but not exceeding 300,000 yuan thereon.
Article 45
If a foreign-funded financial institution carries on its business in violation of the relevant provisions of Chapter IV of this Regulation, the People's Bank of China shall give a warning thereto, confiscate the ill-gotten gains therefrom and impose a fine exceeding one time but not exceeding three times the ill-gotten gains thereon; if the ill-gotten gains has not been received or is less than 50,000 yuan, the People's Bank of China shall impose a fine exceeding 50,000 yuan but not exceeding 300,000 yuan thereon.
Article 46
If a foreign-funded financial institution, in violation of the relevant provisions of this Regulation, refuses or obstructs the supervision or inspection imposed according to law or submits a false document, material or report, the People's Bank of China shall give a warning thereto and impose a fine exceeding 100,000 yuan but not exceeding 500,000 yuan thereon.
Article 47
If a foreign-funded financial institution, in violation of the relevant provisions of this Regulation, fails to submit the financial statement, related document, material or report as scheduled or to work out the business rules or to establish and improve the relevant management system as required, the People's Bank of China shall give a warning thereto, order it to make corrections within the specified limit of time, and concurrently impose a fine exceeding 10,000 yuan but not exceeding 100,000 yuan thereon.
Article 48
If a foreign-funded financial institution violates this Regulation, it shall be punished under the relevant provisions of Article 43, 44, 45, 46 or 47 of this Chapter, in addition, if its circumstances are serious, the People's Bank of China may order the said institution to stop its business and to make rectification or revoke the banking business permit obtained by that institution; and revoke the qualifications of the superior managerial staffs of that institution for the positions in China within a certain period of time or even up within his whole life.
Article 49
If a foreign-funded financial institution violates other laws or regulations of the People's Republic of China, relevant competent authorities shall deal therewith according to law.
Chapter VII Supplementary Provisions
Article 50
Banking business institutions established and managed in the mainland by financial institutions of Hong Kong special administrative area, Macao special administrative area and Taiwan region shall be governed by applying mutatis mutandis this Regulation.
Article 51
Measures governing representative offices in China established by foreign financial institutions shall be formulated by the People's Bank of China separately.
Article 52 This Regulation shall enter into operation on February 1, 2002. The Regulation Governing Foreign-funded Financial Institutions of the People's Republic of China, promulgated on February 25, 1994 by the State Council, shall be repealed at the same time.
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