Laws of the People's Republic of China

The People's Bank of China

Circular of the People's Bank of China on Relevant Issues Concerning the Market Access of Foreign-funded Financial Institutions after the Promulgation of the Detailed Rules for the Implementation of the Regulations of the People's Republic of China on the Administration of Foreign-funded Financial Institutions

YiFa [2002] No.22

January 29, 2002

The branch banks and business management departments of the People's Bank of China:

The Regulations of the People's Republic of China on the Administration of Foreign-funded Financial Institutions (hereinafter referred to as the Regulations) have been promulgated by the State Council and shall come into force on February 1, 2002. The Detailed Rules for the Implementation of the Regulations of the People's Republic of China on the Administration of Foreign-funded Financial Institutions (hereinafter referred to as the Detailed Rules) revised and promulgated by this bank shall also come into force soon. The relevant issues concerning the market access of foreign-funded financial institutions after the implementation of the Detailed Rules are hereby notified as follows:

I.

Issues concerning the change of license for operation of financial business and the supplement of capital or operation fund

Where the application of the Regulations results in the change of business scope of foreign-funded financial institutions, all the business foreign-funded financial institutions shall, according to the provisions of the Regulations and the Detailed Rules, take the following documents to change the licenses for operation of financial business at the head office of the People's Republic of China: an application letter (indicating the changed matters) to the president of the People's Bank of China signed by the board chairman or president (general manager) of the foreign-funded institution with legal person status, the president (general manager) of the branch of the foreign bank, an introduction letter issued by the branch of the People's Republic of China of the place where that institution is located, the duplicate of the license for operation of financial business of that institution, and the relevant documents of approval of the People's Bank of China (for alteration of registered capital or operation fund, business scope, etc.). And after changing the license for operation of financial business, the institution shall make the registration of alteration with the department of industry and commerce administration, and make public announcement according to the requirements.

Considering the different situations of foreign-funded financial institutions, the change of the license for operation of financial business may be handled in the following ways:

1.

For those that keep the current partial foreign exchange business and don't expand the objects of the foreign exchange services, the following way shall apply:

1)

Solely foreign-funded and joint venture financial companies, and solely foreign-funded and joint venture banks shall, according to Article 5 of the Regulations, namely "the registered capital shall be the paid-in capital", adjust the paid-in capital to meet the registered capital.

a. The institutions of which the paid-in capital has met the minimum limit for registered capital as provided for in Article 5 of the Regulations and Article 31 of the Detailed Rules shall handle the matters such as changing the licenses and making the industry and commerce registration, etc. before June 1, 2002.

b. The institutions of which the paid-in capital fails to meet the minimum limit for registered capital as provided for in Article 5 of the Regulations and Article 31 of the Detailed Rules shall, according to the relevant provisions of the Detailed Rules on the change of capital, apply for increasing the capital to meet the registered capital and handle the matters such as changing the licenses and making the industry and commerce registration, etc. before August 1, 2002.

2)

The branches of foreign banks and the branches of solely foreign-funded and joint venture banks shall handle the matters such as changing the licenses and making the industry and commerce registration, etc. before June 1, 2002.

2.

For the foreign-funded financial institutions that expand their current partial foreign exchange business to comprehensive foreign exchange business, they may not operate the comprehensive foreign exchange business until applying for increasing the capital and completing the change of licenses and the procedures for industry and commerce registration, and:

a. The foreign-funded financial institutions that have already met the minimum limit of the operation fund or registered capital for operating comprehensive foreign exchange business as provided for by Article 32 of the Detailed Rules shall complete the matters such as changing the licenses and making the industry and commerce registration, etc. before June 1, 2002.

b. The foreign-funded financial institutions that fail to meet minimum limit of the operation fund or registered capital for operating comprehensive foreign exchange business as provided for by Article 32 of the Detailed Rules shall, according to the relevant provisions of the Detailed Rules on the alteration of capital or operation fund, apply for increasing the capital or operation fund and complete the matters such as changing the licenses and making the industry and commerce registration, etc. before August 1, 2002.

3.

For those that keep the current partial foreign exchange business and the partial Renmingbi business, the following way shall apply:

1)

The foreign-funded financial institutions that have already met the minimum limit of registered capital or operation fund as provided for by Article 33 of the Detailed Rules shall complete the matters such as changing the licenses and making the industry and commerce registration, etc. before June 1, 2002.

2)

The foreign-funded financial institutions that fail to meet the minimum limit of registered capital or operation fund as provided for in Article 33 of the Detailed Rules shall, according to the relevant provisions of the Detailed Rules on alteration of capital, apply for increasing the capital or operation fund and complete the matters such as changing the licenses and making the industry and commerce registration, etc. before Aug.1, 2002.

4.

For the foreign-funded financial institutions that expand their current partial foreign exchange business to comprehensive foreign exchange business and keep the current partial Renmingbi business may operate the comprehensive business only after applying for increasing the capital and completing the matters such as changing the licenses and making the industry and commerce registration, etc. and:

a. The foreign-funded financial institutions that have already met the minimum limit of registered capital or operation fund as provided for by Article 34 of the Detailed Rules shall complete the matters such as changing the licenses and making the industry and commerce registration, etc. before June 1, 2002.

b. The foreign-funded financial institutions that fail to meet the minimum limit of registered capital or operation fund as provided for by Article 34 of the Detailed Rules shall, according to the relevant provision of the Detailed Rules on alteration of capital, apply for increasing the capital or operation fund and complete the matters such as changing the licenses and making the industry and commerce registration, etc. before August 1, 2002.

5.

The foreign-funded financial institutions wishing to apply for operating Remingbi business shall complete the matters such as changing the licenses and making the industry and commerce registration, etc. before August 1, 2002.

II.

Issues concerning applying for the establishment of foreign-funded financial institution:

1.

The application documents already submitted by the foreign-funded financial institutions shall still be valid. The relevant branches and business management departments shall notify the foreign-funded financial institutions within their respective jurisdictions that have submitted applications to adjust and supplement the application documents according to the relevant provisions of the Regulations and the Detailed Rules and submit them to the head office of the People's Bank of China, and to send copies to the branches of the People's Bank of China of their locations.

2.

From Feb.1, 2002, the applicants that wish to apply for the establishment of foreign-funded financial institution shall, according to the relevant provisions of the Regulations and the Detailed Rules, submit the relevant materials to the branches of the People's Bank of China of their locations, and those materials shall be submitted level by level to the head office of the People's Bank of China for examination and approval after passing the preliminary examination conducted by the branches of the People's Bank of China of their locations.

III.

Issues concerning the requirements for the report of the business types and the products and services thereof

Foreign-funded financial institutions shall, before May 1, 2002, report the business types they have already launched, and the names and brief introductions of the products and services under the types to the branches of the People's Bank of China of their locations.

The branches of the People's Bank of China of their locations shall be responsible for gathering the documents reported by the foreign-funded financial institutions within their respective jurisdictions and submitting those documents level by level to the head office of the People's Bank of China before June 1, 2002.

IV.

Issues concerning the grace period for meeting the relevant provisions of the Regulations and the Detailed Rules

The People's Bank of China shall give a grace period of 6 months to the foreign-funded financial institutions that fail to meet the relevant provisions of the Regulations and the Detailed Rules. The foreign-funded financial institutions shall meet the relevant provisions before August 1, 2002. The foreign funded financial institutions that fail to meet the requirements of relevant provisions before August 1, 2002 shall apply to the branches of the People's Bank of China of their locations, explain the reasons for failing to meet the requirements and estimate the time limit to meet the requirements.

The branches of the People's Bank of China of their locations shall, after the preliminary examination, submit the applications to the head office of the People's Bank of China for examination and approval. For those that fail to meet the requirements as provided for by the Regulations and the Detailed Rules and fail to file formal applications, the People's Bank of China shall, regarding the seriousness of the circumstances, take the supervision and control measures according to the relevant provisions of the Regulations.

Please transmit the aforesaid circular to the central branch banks of the People's Bank of China within your respective jurisdictions, and notify the business foreign-funded financial institutions within your respective jurisdictions about the relevant information. As the Regulations and the Detailed Rules involve many fields and are so influential, the branches of the People's Bank of China shall report the problems encountered in the execution to the head office without delay.