Laws of the People's Republic of China

Circular of the People's Bank of China, Ministry of Finance, China Banking Regulatory Commission, China Securities Regulatory Commission on Promulgating the Supplementary Circular on the Acquisition of Personal Credits

Yin Fa [2006] No. 189

The people's governments of each province, autonomous region, municipality directly under the Central Government, and city specifically designated in the state plan, Shanghai Headquarters, all branches and business departments of the People's Bank of China, central sub-branches of the People's Bank of China in provincial capital cities, central sub-branches of the People's Bank of China in Dalian, Qingdao, Ningbo, Xianmen and Shenzhen, the fiscal departments (bureaus) of each province, autonomous region, municipality directly under the Central Government and city specifically designated in the state plan, the banking regulatory bureaus of each province, autonomous region, municipality directly under the Central Government, and city specifically designated in the state plan, the securities regulatory bureaus of each province, autonomous region, municipality directly under the Central Government, and city specifically designated in the state plan,

On January 27, 2006, the People's Bank of China, Ministry of Finance, China Banking Regulatory Commission, China Securities Regulatory Commission printed and distributed the Supplementary Circular on Acquisition of Personal Credits (hereinafter referred to as the Supplementary Circular ). You're hereby informed of the following matters with regards to the release of the Supplementary Circular:

1.

The Supplementary Circular shall be declassified as of the date of promulgation. The contents released shall be based on the Annex of this Circular. The local people's governments at all levels and all related departments shall rigorously carry out the national uniform policies in accordance with the Supplementary Circular.

2.

The publicity of the Supplementary Circular shall be subject to the principle that "it shall be posted in the institution which is guilty of wrongdoing" and that "no putting on the Internet or on any newspaper". Under the direction concerning the real conditions of the local people's governments and regulatory departments, it shall be put up in the business spots of the financial institution by the liquidation group (trust group or work team) of the financial institution to be settled.

3.

The local people's governments at all levels and all related departments shall perform well in the propaganda and interpretation of the Supplementary Circular, make the detailed and planned working scheme and strive to maintain the financial stability and social stability. All identification and confirmation groups shall carefully implement their functions, strictly control the quality, and fulfill the related tasks.

Appendix: Supplementary Circular on the Acquisition of Personal Credits

The People's Bank of China

The Ministry of Finance of the People's Republic of China

The China Banking Regulatory Commission

The China Securities Regulatory Commission

June 2, 2006 Appendix: Supplementary Circular on the Acquisition of Personal Credits

You're hereby informed of the related issues referring to the acquisition of personal credits to the financial institutions under disposal during the period from September 30, 2004 to January 31, 2006 (including January 31, 2006, below the same):

The personal credits newly occurred after September 30, 2004 shall on the basis of the policies on the acquisition of personal credits which are depicted in the Advice on the Purchase of Personal Credits and the Settlement Funds of Clients' Securities (hereinafter referred to as the Purchase Advice) and the Measures for the Implementation of the Purchase of the Personal Credits and the Settlement Funds of Clients' Securities (hereinafter referred to as the Implementation Measures), be gradually reinforced and treated in view of different conditions.

1.

Principle of Acquisition

(1)

The determination of personal credits, the standards on the calculation of credits, the raising and repayment of acquisition funds, as well as the policies on the acquisition of personal savings deposits and the principal and interests of the settlement Funds of clients' securities shall be conducted in accordance with the Purchase Advice and the implementation Measures.

(2)

The legal contracts, which were concluded before or on September 30, 2004 and were updated after September 30, 2004 owing to their expiration (in which the creditors were not changed and the original contract amounts were not exceeded, the same below) and which were examined and verified by the regulatory department, shall be still subject to the standards which is presented in the Purchase Advice and the Implementation Measures. As regards any contract updated without being examined or verified by the regulatory department, it shall be subject to the standards for the acquisition of personal credits as decided in this Circular.

(3)

Where any new fund was transfused into the credit when an aforesaid original credit contract was updated, the new fund shall be subject to the standards for the acquisition of personal credits as decided in this Circular.

(4)

The new personal credit concluded during the period from September 30, 2004 (excluding September 30, 2004, the same below) to January 31, 2006 shall be subject to the standards for the acquisition of personal credits as determined in this Circular.

2.

Acquisition Standards

The acquisition of the personal credits which took place during the period from September 30, 2004 to January 31, 2006 and which fell in the range of acquisition shall accord with the following standards:

(1)

Where the accumulative amount of credits of a same person (an individual with the same identity card number) is 100, 000 Yuan or less, the aforesaid credits shall be totally purchased;

(2)

Where the accumulative amount of credits of a same person is over 100, 000 Yuan (excluding 100, 000 Yuan) but less than 200, 000 Yuan, 90 % of the aforesaid credits shall be purchased;

(3)

Where the accumulative amount of credits of a same person is over 200, 000 Yuan (excluding 200, 000 Yuan) but less than 500, 000 Yuan, 80 % of the aforesaid credits shall be purchased;

(4)

Where the accumulative amount of credits of a same person is over 500, 000 Yuan (excluding 500, 000 Yuan) but less than 1, 000, 000 Yuan, 70 % of the aforesaid credits shall be purchased;

(5)

Where the accumulative amount of credits of a same person is over 1, 000, 000 Yuan (excluding 1, 000, 000 Yuan) but less than 2, 000, 000 Yuan, 60 % of the aforesaid credits shall be purchased;

(6)

Where the accumulative amount of credits of a same person is over 2, 000, 000 Yuan (excluding 2, 000, 000 Yuan) but less than 3, 000, 000 Yuan, 50 % of the aforesaid credits shall be purchased; and

(7)

Where the accumulative amount of credits of a same person is over 3, 000, 000 Yuan (excluding 3, 000, 000 Yuan), the aforesaid credits shall not be purchased.

3.

Where any personal credit which took place after September 30, 2004 is in violation of the related provisions, the related department shall hold the related persons responsible, and shall timely convey them to the judicial department if they are involved in any crime.

4.

For any matter not included in this Circular, it shall be subject to the Purchase Advice, Implementation Measures and other provisions.