Monetary Policy

Circular of the People’s Bank of China (PBC) for Streamlining Cross-border RMB Practices and Improving Related Policy

 PBC [2013] No. 168
  Shanghai head office, branches and operation management offices of PBC, central sub-branches in provincial capitals (capital cities), central sub-branches in vice-provincial cities, China Development Bank, policy banks, state-owned commercial banks, shareholding commercial banks, Postal Savings Bank of China,
  In order to further enhance the efficiency of cross-border RMB settlement and facilitate RMB cross-border settlement in financial institutions (hereafter referred to as the banks) and enterprises, issues concerning streamlining the process of cross-border RMB business and improving the related policies are hereby notified as follows:
  I. Cross-border RMB settlement under current accounts
  i. Based on the three principles of “knowing your clients”, “knowing your business” and “conducting due diligence”, domestic banks may handle cross-border settlement directly with the business vouchers or Cross-border RMB Settlement Receipt/Payment Instruction submitted by the enterprises (except the enterprises in the list of regulatory focus for RMB settlement in export commodity trade).
  ii. Where the RMB-settled capital under the enterprise’s current account needs to be credited to the account automatically, domestic banks may handle the entry for the enterprise before verifying the related trade.
  iii. Domestic banks are encouraged to handle financing business for cross-border RMB trade. Domestic banks may transfer across the border the financing assets for cross-border RMB trade.
  iv. Where enterprises in the list of regulatory focus for RMB settlement in export commodity trade handle the cross-border RMB settlement under current accounts, domestic banks shall verify the trade strictly in accordance with principles provided in the Official Letter on Enterprises in the List of Regulatory Focus for RMB Settlement in Export Commodity Trade Issued by General Executive Office of the PBC, General Office of the Ministry of Finance, General Office of the Ministry of Commerce, General Office of General Administration of Customs, General Office of State Administration of Taxation and General Office of China Banking Regulatory Commission (PBC Office [2012] No.381). Branches of PBC may send the list regulatory focus RMB settlement in export commodity trade of local registered enterprises to banks in their administrating region for internal use.
  II. Cross-border interbank clearing for RMB accounts of bank cards
  i. Cross-border interbank clearing business for transactions within the RMB account of bank cards shall be handled by bank card clearing institutions established domestically and qualified to handle RMB business (hereafter referred to as domestic bank card clearing institutions) through overseas RMB business clearing banks or domestic correspondent banks.
  ii. After using RMB account of bank cards issued by domestic banks for overseas consumption or cash withdrawal, domestic issuing banks shall conduct clearing in RMB with domestic bank card clearing institutions, and domestic bank card clearing institutions shall conduct clearing in RMB or foreign currencies with overseas acquirers.
   iii. After using RMB account of bank cards issued by overseas banks for domestic consumption or cash withdrawal, domestic acquirer shall conduct clearing in RMB with domestic bank card clearing institutions, and domestic bank card clearing institutions shall conduct clearing in RMB with oversea issuing banks.  
  iv. Information of cross-border RMB receipt and payment involving cross-border interbank clearing in RMB accounts on bank cards shall be reported by domestic bank card clearing institutions, all through their domestic settlement banks, to cross-border RMB receipt and payment information management system.
   v. Cross-border RMB clearing business on bank cards shall be handled in accordance with the aforementioned provisions. Article 16 of PBC Announcement [2003] No. 16, Article 6 of PBC Announcement [2004] No.8 and the related provisions concerning RMB clearing of personal bank cards in Article 3, 4, 17 of Circular of PBC for Related Issues on Personal RMB Business of Inland Banks and Banks in Hong Kong and Macao are no longer enforced.
  III. Overseas RMB loans by domestic non-financial institutions
  i. Domestic non-financial institutions may apply for overseas RMB loan settlement to domestic banks. Where a domestic non-financial institution has equity relations or is ultimately held by a parent company and has a member institution which functions as regional headquarter or investment management, it may apply to domestic banks for settlement business of overseas RMB loans using the model of RMB capital pools. 
  ii. Domestic banks shall carefully examine the application materials of overseas RMB loans submitted by domestic non-financial institutions before handling cross-border RMB settlement for such institutions.
  iii. Domestic non-financial institutions which issue RMB loans overseas shall apply to domestic banks for exclusive RMB savings accounts specifically for overseas RMB loans in accordance with such administrative provisions for bank settlement accounts as the Administrative Rules for the RMB Bank Settlement Accounts (PBC Decree [2013] No.5). 
  iv. The interest rate, tenor and purpose of overseas loans issued by domestic non-financial institutions shall be decided through consultation based on the commercial principles by debtors and creditors within reasonable scope.
  v. Overseas RMB loans shall be recovered in RMB through the exclusive RMB savings account that processes such loan. The recovered amount shall not exceed the sum of the loaned amount, interest, domestic income tax and related fees.
  vi. Banks shall carefully perform the duty of submitting information, timely and accurately submitting such information as that of RMB cross-border payment and cross-border financing business to the Cross-border RMB Receipt and Payment Information Management System. In case any cross-border guarantee business is involved, information on RMB cross-border guarantee shall be submitted as well.
  IV. RMB bonds issued overseas by domestic non-financial institutions 
  i. Domestic non-financial institutions may apply to domestic banks for exclusive RMB savings accounts specifically for the funds raised by issuing bonds remitted from abroad as approved by PBC in accordance with such provisions for bank settlement accounts as the Administrative Rules for RMB Bank Settlement Accounts (PBC Decree [2003] No.5). The current deposit rate set by PBC shall be applied for the savings in such account. The funds shall be used in strict accordance with the scope set out in bond prospectus and shall not be misused.
  ii. Where the RMB bonds issued overseas involve RMB inbound remittance or repayment of principal and interest, domestic banks shall timely and accurately submit information on RMB cross-border payment to the Cross-border RMB Receipt and Payment Information Management System. If any RMB cross-border guarantee business is involved, information on RMB cross-border guarantee shall be submitted as well. 
  V. Domestic non-financial institutions may provide RMD guarantee in accordance with provisions in such laws as Property Law of the PRC and Guarantee Law of the PRC. During the performance of the guarantee by domestic non-financial institutions, domestic banks shall examine the authenticity before handling RMB settlement and shall submit related information to the Cross-border RMB Receipt and Payment Information Management System. The payment for performing the guarantee may be made directly with the overseas remaining RMB funds by domestic non-financial institutions.
  VI. The tenor of RMB account financing by domestic correspondent banks for overseas participating banks is extended to one year. The financing ratio of the account shall not exceed 3% of the balance of all the RMB deposits of such domestic correspondent banks by the end of the previous year.
  VII. Fund remittance and transfer due to the need of settlement are allowed between the inter-bank RMB current account opened by an overseas participating bank in a domestic correspondent bank and the RMB account opened by an overseas participating bank in an overseas RMB clearing bank. Fund remittance and transfer due to the need of settlement are allowed among the RMB clearing accounts opened domestically by overseas RMB clearing banks.
  VIII. All branches and sub-branches of PBC shall take full advantage of the Cross-border RMB Receipt and Payment Information Management System, properly monitor and analyze information, conduct regular off-site inspection and supervision on cross-border RMB business in banks and enterprises and conduct on-site inspection when necessary, so as to prevent risks. Where any bank violates the related provisions, the bank shall complete rectification within a given time as is required.
  IX. The Circular is effective as of the date of its release. In case any provision conflicts with the Circular, the Circular shall prevail. All branches and sub-branches of the level above the central sub-branch in vice-provincial cities are requested to deliver the Circular to all branches and sub-branches of PBC, foreign-funded banks and local corporate financial institutions.
  In case of any problem during the execution, please report to the Monetary Policy Department II.