Laws of the People's Republic of China

Guiding Opinions of the People's Bank of China on Promoting the Development of the Commercial Acceptance Bill Business

Yin Fa [2006] No. 385 November 9, 2006

A commercial acceptance bill is a bill issued by a legal person or other organization, accepted by a non-bank payer, under which the payer shall unconditionally pay a determined amount to the payee or the holder on a designated date. A commercial acceptance bill is a credit payment instrument on the basis of commercial credit, and is of clearly rights and obligations, agreeable date payment, negotiable discount, and so on. The dissemination of using commercial acceptance bills is instrumental in enriching the ways of enterprise payment, and coordinating production, supply and sale of the enterprises; it is instrumental in alleviating inter-enterprise payments default, and safeguarding the commodity transaction order to be normal and smooth; it is instrumental in promoting the organic combination of the bank credit with the enterprise commercial credit, and alleviating the contradictions of difficult financing in medium and small enterprises; it is instrumental in promoting the conversion of commercial credit into bills, enriching the instruments in the bill market, and promoting the development of the bill market; it is also instrumental in establishing and perfecting a sound credit mechanism, strengthening social credit consciousness, and advancing the social credit level.

In recent years, the commercial bill business in China has been rapidly developed, and the scale of acceptance, discount and inter-bank discount of commercial bills has been continuously enlarged. These developments have played a positive role in facilitating enterprise payments settlement, broadening enterprise financing channels, and improving the quality of credit assets of commercial banks. Nevertheless, a structural contradiction is prominent among commercial bills, which is bank acceptance bills occupying an excessive large proportion while commercial acceptance bills occupying an excessive small proportion. For the purpose of further enhancing the efficiency of settlement for enterprises, adjusting the category structure of commercial bills, leading and encouraging the development of commercial credit, and bringing into play the promoting function of commercial acceptance bills to social and economic development, we hereby bring forward these opinions as follows.

1.

To stimulate the initiative of all sectors, and establish a sound mechanism for disseminating commercial acceptance bills effectively.

The People's Bank of China shall organize commercial banks to draw up and disseminate the specific implementation schemes on using commercial acceptance bills, select and encourage some enterprises with sound credit and stable production, supply and sale to issue, receive and transfer commercial acceptance bills in commodity transactions or labor service supply; it shall, by making key demonstrations and by fanning out from point to area, stimulate other enterprises to make wide use of commercial acceptance bills under the development of commercial acceptance bill business between high quality enterprises and their upstream or downstream enterprises; it shall, in accordance with the macro-control policies and industrial development policies of the state, adjust measures to local conditions, and provide re-discount supports to the commercial acceptance bills issued to enterprises with good credit; it shall create conditions to improve the establishment of a convenient inquiry platform for the commercial acceptance bill business, and to reduce the transaction cost for the commercial acceptance bill business; it shall, subject to the principle of balancing cost, income and risk as well as helping to bring into play the initiatives of all sectors, research and explore a reasonable price mechanism for promoting the development of the commercial acceptance bill business.

Commercial banks shall change their concepts, innovate the implementation forms of the commercial acceptance bill business, seek a new profit growth point, and carry out the win-win relationship between banks and enterprises; they shall continuously explore the establishment of institutions dealing exclusively in bills, expand and perfect the business scope of the institutions dealing exclusively in bills, and promote the specialized and intensive of the bill business; they shall strongly disseminate the mode of bank credit boosting enterprise commercial credit, explore the combination of letter of guaranty business, bill surety business with the commercial acceptance bill business, and provide surety or discount surety or any other form to enhance the credit guaranty extent of commercial acceptance bills; they shall do well in credit granting of commercial acceptance bills, and provide discount supports to the commercial acceptance bills issued by enterprises with good credit.

Enterprises may, according to the trait of commercial acceptance bill that may be paid on an agreed date, pay by issuing commercial acceptance bills when postponing the payment. Qualified medium and small enterprises may select enterprises with sound credit and abundant funds to be sureties of commercial acceptance bills in order to enhance the bill credit and promote the circulation of commercial acceptance bills accepted by medium and small enterprises. The entity payees are encouraged to, on the basis of fully knowing the credit conditions of the entity payers, receive commercial acceptance bills, reduce oral credit and open-account credit, and increase the ratio of contract performance.

2.

To fully bring into play the functions of the basic database of enterprise credit information, and boost the confidence of enterprises in receiving commercial acceptance bills.

The People's Bank of China shall research and push the use of enterprise credit information in the commercial acceptance bill business, by strengthening publicity, lead and encourage commercial banks and enterprises to, when handling the commercial acceptance bill business, use the basic enterprise credit information database in accordance with relevant laws, and provide credit inquiry supports for disseminating commercial acceptance bills. It shall, in a planned way, organize intermediaries with public trust to develop the credit rating on enterprises, and promote the combination of rating results with bank credit supports. It shall continuously enhance the collection of enterprise credit information, enlarge the scope of information gathering, collect the information on opening and using bank settlement accounts in disregard of the relevant rules and regulations, on making payments by breach of contract, on evasion of debts, on defaulting on tax payment, and etc., and reveal the said information in suitable ways.

Commercial banks shall enhance collection, processing, analysis and use of the information about clients' payment and settlement credit, follow up and know about the information on issuing, accepting and cashing commercial acceptance bills by enterprises, and initiatively submit the information of the commercial acceptance bill acceptors on undesirable payments and any other credit information to the People's Bank of China. The deposit bank of the commercial acceptance bill acceptor shall coordinate with the reasonable inquiries of the deposit bank or discount bank of the holder.

The drawers and acceptors of commercial acceptance bills are encouraged to make credit rating, and the results of which shall be included into the basic database of enterprise credit information and be able to inquiry in accordance with relevant laws. When an enterprise handles the commercial acceptance bill business, the drawer and the acceptor shall strictly abide by the settlement principle of maintenance of commitments, and making payments subject to the contract, and fully cash the due commercial acceptance bills in a timely manners, so as to create good enterprise credit culture, advance their own brands and prestige, and thus improve the social credit.

3.

To establish an effective mechanism on discipline against breach of contract in making payments, and urge the commercial acceptance bill acceptors to make payments and to perform contracts.

The People's Bank of China shall adopt specific measures purposefully, gradually establish information archives of commercial acceptance bill business within its jurisdiction, and do well in monitoring and analyzing the commercial acceptance bill business within its jurisdiction; it shall build up a blacklist of those which unreasonably refuse and delay the payments under commercial acceptance bills, regularly publicize the blacklist, enhance the concern of the society to the payments in breach of contracts, and intensify efforts in the discipline on the enterprises with breach of contracts.

If any payer to a due commercial acceptance bill deliberately postpones or unreasonably refuses the payment thereunder, the People's Bank of China shall, subject to Article 33 of the Measures for the Implementation on the Administration of Negotiable Instruments, impose a fine upon him at 0.07% of the amount on the bill per day.

Where any payer repeatedly refuses or delays the payment without any justifiable reason, the commercial bank concerned shall stop the discount, surety or discount surety, and etc. of commercial acceptance bills for the said payer, it may also suspend the settlement business of partial or all payments.

4.

To do well in risk prevention and control in the commercial acceptance bill business, and safeguard the healthy development of the commercial acceptance bill business.

The People's Bank of China shall enhance the supervision and control of the commercial acceptance bill business. It shall release the risk information on the commercial acceptance bill business in a timely manner, make necessary risk presentations, and guide enterprises to handle the commercial acceptance bill business correctly.

Commercial banks shall intensify the risk management of commercial acceptance bills. They shall strictly examine the genuine trade background, prevent obtaining bank discount fund using commercial acceptance bills or any other act in violation of any law or rule; they shall perfect the qualification examination procedures, earnestly investigate the credit and debt repayment capacities of the acceptance enterprises and the enterprises applying for discount, and grant credit prudentially to enterprises with poor credit standing and financial conditions, avoid adding non-performing assets; they shall include the quota of credit for discount, surety or discount surety of commercial acceptance bills into the comprehensive credit quota for management, control the total amount, and adjust dynamically at proper times in accordance with the conditions of the acceptance enterprises and the enterprises applying for discount in respect of finance, credit and business operation, and etc.

When an enterprise uses a commercial acceptance bill, it needs to master the basic knowledge on risk prevention and control in the commercial acceptance bill business, to get familiar with all provisions on issuance, acceptance, endorsement and discount of commercial acceptance bills, and perform the commercial acceptance bill business accurately; it shall strictly follow the requirements on genuine trade background, eliminate obtaining bank funds by using associated relationships to fabricate transactions. When an enterprise accepts a commercial acceptance bill, it shall consider its own fund strength, and avoid blind acceptance or expansion of debts. When an enterprise receives a commercial acceptance bill, it shall pay attention to examine the authenticity of the bill and the credit standing of the acceptor carefully, so as to prevent bill risks.

5.

To enhance the propaganda and trainings on the commercial acceptance bill business, and popularize the knowledge on the commercial acceptance bill business.

The People's Bank of China shall organize and coordinate commercial banks to face the public and widely implement the propaganda and trainings on the commercial acceptance bill business by adopting various forms. It shall publicize the significance and functions of commercial acceptance bills in providing enterprises with convenience of settlement and financing, as well as the functions of enriching enterprise payment settlement instruments, enhancing the enterprise fund use efficiency, improving enterprise image and enhancing enterprise credit.

Commercial banks shall fully use the direct relationships between banks and enterprises, and shall start from providing clients with more and better payment settlement services, intensify the propaganda and trainings for the accounting staff of enterprises by various means, and enable them to know the negotiable instrument business well, especially the basic knowledge and operational procedures on commercial acceptance bills; they shall lead enterprises, in accordance with their economic activities, to use commercial acceptance bills more frequently; they shall help the accounting staff of enterprises in grasping the methods and skills in identifying genuine bills from fake ones, so as to be able to operate negotiable instrument business correctly, avoid receiving fake or blemished bills and promote the circulation of the bills.