Laws of the People's Republic of China

Circular of the People's Bank of China on Further Intensifying the Management of Deposit and Payment of Renminbi

Yin Fa [2006] No. 154

Shanghai Headquarters, all branches and business departments of the People's Bank of China, the central sub-branches of the People's Bank of China in all provincial cities, Shenzhen Central Sub-branch of the People's Bank of China, China Agriculture Development Bank, all state-owned commercial banks, equity joint commercial banks, and China Postal Savings and Remittance Bureau,

Recently, it was complained that some financial institutions operating the Renminbi deposit and withdrawal business (hereinafter referred to as the financial institutions) do not fulfill their legal duties owing to merely seeking their own economic benefits. They refuse to adjust the types of Renminbi or change the deformed or defiled Renminbi notes for people and they do not sort out the deformed and defiled Renminbi notes in accordance with the relevant provisions of the People's Bank of China so that some of the Renminbi notes which were not suitable to circulate re-flow into the market. Their violations not only damaged the interests of the general public and the image of the financial industry, but also influenced the normal circulation of Renminbi. , You are hereby notified of the following requirements in order to further intensify the management of circulation of Renminbi and regulate the deposit and payment of Renminbi:

I.

All financial institutions shall advance their awareness of serving the general public, and shall execute carefully the Regulation of the People's Republic of China on the Administration of Renminbi, the Measures of the People's Bank of China for the Change of Deformed and Defiled Renminbi Notes and other regulations, and adjust the types of Renminbi notes for the public and freely change the deformed or defiled Renminbi notes for the general public in accordance with the principle of reasonable needs. The financial institutions shall consciously accept the supervision of the general public, carefully accept the complaints of the clients and carefully improve and regulate the deposit and payment of Renminbi.

II.

All financial institutions shall focus on checking and counting the Renminbi notes withdrawn from circulation. They shall establish an effective internal control mechanism and deliver the Renminbi notes (including paper notes and coins) which meet the provisions of the Criterions on Sorting out the Renminbi Notes Not Suitable to Circulate to the People's Bank of China in order to hinder any external payment of Renminbi notes not suitable to circulate according to the Criterions on Sorting out the Renminbi Notes Not Suitable to Circulate,.

III.

All branches of the People's Bank of China shall strengthen the supervision over the management of circulation of Renminbi and regularly and irregularly direct on-the-spot inspections on the over-the-counter deposit and payment of Renminbi notes of the financial institutions under their respective jurisdiction, shall timely correct the irregular acts, shall punish the violators according to the relevant provisions, shall strictly hold the pass of the Renminbi note bundles delivered by the financial institutions, shall not accept any Renminbi note bundle which falls short of the "Five standards on good Renminbi note bundles" (namely counting correctly, seeking out all problematic notes, putting the notes in order, binding the notes tightly and affixing a seal clearly) and shall circulate a notice of criticism on the financial institutions that have a high error rate by circulating a notice,

The present Notification shall be transmitted by 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, and Shenzhen Central Sub-branch of the People's Bank of China to the urban commercial banks, rural commercial banks, rural cooperative banks, and urban and rural credit cooperatives within their respective jurisdictions.

The People's Bank of China

May 11, 2006