MEASURES FOR THE SUPERVISION AND ADMINISTRATION OF THE PILOT SECURITIZATION OF CREDIT ASSETS OF FINANCIAL INSTITUTIONS

China Banking Regulatory Commission

Order of China Banking Regulatory Commission

No. 3

The present Measures for Supervision and Administration of the Pilot Securitization of Credit Assets of Financial Institutions, which
were adopted at the 38th chairman’s meeting of China Banking Regulatory Commission on September 29, 2005, are hereby promulgated
and shall go into effect as of December 1, 2005.

Chairman of China Banking Regulatory Commission Liu Mingkang

November 7, 2005

Measures for the Supervision and Administration of the Pilot Securitization of Credit Assets of Financial Institutions

Chapter I General Provisions

Article 1

With a view to regulating the pilot securitization of credit assets, promoting the cautious implementation of securitization of credit
assets by financial institutions, effectively managing and controlling the relevant risks in the securitization of credit assets
and protecting the legitimate rights and interests of investors and the parties concerned, and in accordance with the Banking Supervision
Law of the People’s Republic of China, the Law of the People’s Republic of China on Commercial Banks, the Trust Law of the People’s
Republic of China and other relevant laws and regulations as well as the Measures for the Administration of the Pilot Securitization
of Credit Assets, the present Measures are formulated.

Article 2

For the purposes of the present Measures, the term “financial institutions” shall refer to the commercial banks, policy banks, trust
and investment companies, finance companies, urban credit cooperatives and rural credit cooperatives as established in China, and
other financial institutions subject to the supervision and administration of China Banking Regulatory Commission (hereinafter referred
to as the CBRC).

Article 3

The present Measures shall be applicable to those structural financing activities which are carried out within the territory of the
People’s Republic of China and whereby a banking financial institution, as the promoter, entrusts the credit assets to a trustee
institution, and the trustee institution issues beneficial securities to investment institutions in the form of asset-backed securities
and pays the yields from asset-backed securities by the cash generated from the aforesaid assets.

Article 4

When engaging in the securitization businesses of credit assets as the promoter, trustee, credit enhancement institution, loan service
institution, capital custodian in the securitization or the investment institution of asset-backed securities, a financial institution
shall perform relevant duties according the relevant laws, administrative regulations, ministerial rules and the relevant legal documents
relating to the securitization of credit assets, and shall effectively identify, measure, monitor and control relevant risks.

Article 5

The CBRC shall supervise and administrate the securitization businesses of credit assets of financial institutions according to law.

Without approval of the CBRC, a financial institution may not engage in the securitization businesses of credit assets as the promoter
or the trustee of special purpose trusts for the securitization of credit assets.

Chapter II Market Access Management

Article 6

The term “promoter in the securitization of credit assets” shall refer to the financial institutions which transfer the credit assets
by establishing special purpose trusts.

Article 7

When a banking financial institution, as the promoter in the securitization of credit assets, transfers the credit assets by establishing
special purpose trusts, it shall satisfy the following requirements:

(1)

Having good social reputation and operational performance, and having no major irregularities within the latest three years;

(2)

Having sound corporate governance structure, and risk management and internal control system;

(3)

Having a reasonable target and clear strategic planning for the securitization businesses of credit assets, which comply with its
overall management objectives and development strategies;

(4)

Having proper standards and procedures for the selection of trustee institutions for special purpose trusts;

(5)

Having professional personnel, a business processing system, accounting system and management information system as well as a risk
management and internal control system which are necessary for carrying out the securitization businesses of credit assets;

(6)

Having no bad record on engaging in the securitization businesses of credit assets within the latest three years; and

(7)

Other prudential requirements as prescribed by the CBRC.

Article 8

The term “trustee for special purpose trusts” shall refer to the institution that promises the trusts and thus takes charge of the
management of special purpose trust assets and the issuance of asset-backed securities in the course of the securitization of credit
assets. A trustee shall be a trust and investment company as established according to law or any other institution approved by the
CBRC.

Article 9

To be a trustee for special purpose trusts, a trust and investment company shall satisfy the following requirements:

(1)

Having registered anew for more than three years under the relevant provisions of the state;

(2)

Its registered capital shall be not less than RMB 0.5 billion Yuan, and its net assets at the end of each of the latest three years
shall be not less than RMB 0.5 billion Yuan;

(3)

The asset status and fluidity of its self-management businesses are good and comply with the relevant supervisory requirements;

(4)

All of its original deposit liabilities have been cleared up, and there is no new deposit liability or any other disguised liability
in the name of trusts, etc.;

(5)

It shall have good social reputation and operational performance, all of its due trust projects shall have been smoothly completed
according to the stipulations of contracts, and there is neither bad record of misappropriating trust assets, nor major irregularities
within the latest three years;

(6)

Having a sound corporate governance structure and operational procedures for trust businesses, as well as the risk management and
internal control system;

(7)

Having professional personnel, a business processing system, accounting system, management information system and a risk management
and internal control system necessary for performing the duties of trustee institutions for special purpose trusts;

(8)

Having disclosed the annual report pursuant to the provisions; and

(9)

Other prudential requirements as prescribed by the CBRC.

Article 10

To apply for the qualification of a trustee for special purpose trusts, a trust and investment company shall file an application with
the CBRC, and submit the following documents and materials (in triplicate):

(1)

An application report;

(2)

The company’s business license, certificate of registered capital and certificate of new registration for three years or more;

(3)

The operational rules, the accounting system as well as the risk management and internal control system for the management of special
purpose trust assets;

(4)

The list and resumes of the persons in-charge of businesses and main business personnel for the management of special purpose trust
assets;

(5)

The company’s financial statements as audited of the latest three fiscal years;

(6)

The self-discipline commitment of the applicant; and

(7)

Other documents and materials as required by the CBRC.

Article 11

The CBRC shall, within five working days as of the date of receipt of complete application materials from a trust and investment company,
decide whether or not to accept the application. If the CBRC decides not to accept the application, it shall inform in writing the
applicant of the decision and give the reasons therefor; if the CBRC decides to accept the application, it shall, within one month
as of the day when the application is accepted, make a written decision on whether or not to approve the application.

Article 12

The market access requirements and procedures for other financial institutions to apply for the qualification of a trustee for special
purpose trusts shall be separately promulgated by the CBRC.

Article 13

Where a banking financial institution, as the promoter, entrusts the credit assets to a trustee and lets the trustee issue beneficial
securities to investment institutions in the form of asset-backed securities, an application shall be jointly filed by the banking
financial institution that satisfies the requirements as prescribed in Article 7 of the present Measures and the financial institution
that has obtained the qualification of a trustee for special purpose trusts, and the following documents and materials (in triplicate)
shall be submitted thereby:

(1)

An application report signed by the promoter and the trustee;

(2)

A feasibility research report;

(3)

Proposal on the securitization businesses of credit assets;

(4)

Drafts of the trust contract, loan service contract, capital custody contract as well as other relevant legal documents;

(5)

The draft of legal opinions issued by practicing lawyers, the draft of accounting opinions issued by certified public accountants,
the draft of the credit rating report and the statements on continuous follow-up rating arrangements as issued by the credit appraisal
institutions;

(6)

Promoter’s standards and procedures for the selection of the trustee for special purpose trusts;

(7)

The operational procedures, the accounting system as well as the risk management and internal control system of the promoter in the
securitization businesses of credit assets;

(8)

The list and resumes of the persons in charge of businesses and main business personnel of the promoter for the securitization businesses
of credit assets;

(9)

Trustee’s standards and procedures for the selection of the loan service institution, the capital custodian and other institutions
involved in the securitization businesses of credit assets;

(10)

The statements on the principles and methods of the trustee for the investment management of the yields from credit assets within
the intervals of paying the yields from credit assets; and

(11)

Other documents and materials required to be submitted by the CBRC.

The “proposal on the securitization businesses of credit assets” as mentioned in Item (3) of the preceding Paragraph shall contain:

(1)

Names and domiciles of the promoter, trustee, loan service institution, capital custodian and other institutions participating in
the securitization, and statement on their related relationships;

(2)

Statements on the experiences and default records of the promoter, trustee, loan service institution and capital custodian in their
respective earlier securitization businesses;

(3)

Standards for choosing credit assets for the establishment of special purpose trusts, statements on the asset pool and the relevant
statistical information;

(4)

Granting procedures, examination and approval standards, forms of guaranty and administrative measures for the credit assets in asset
pool, and procedures and methods for the disposal of default loans;

(5)

Transaction structure and main rights and obligations of each participant;

(6)

List of taxes and expenses that need to be paid for the cash flow of trust assets, the sources of payments for various taxes and expenses,
payment links and the priority order of payments;

(7)

Plan on issuance of asset-backed securities, including the information about the different grades of asset-backed securities, the
amount of the principal, credit rating, coupon rate and time limit of each grade and the priority order of the principal and interest
payment;

(8)

Modes of internal and external credit enhancement for the securitization businesses of credit assets, and the drafts of the relevant
contracts;

(9)

Clause of clearance repurchase and other selective or compulsory clauses with respect to redemption or termination;

(10)

Risk analysis of the securitization business of the aforesaid credit assets as well as the control measures;

(11)

Contents which remind the investment institutions of risks at the eye-catching place of the prospectus; and

(12)

Other contents as prescribed by the CBRC.

Article 14

The CBRC shall, within five working days as of the date of receipt of complete application materials jointly submitted by a promoter
and a trustee, decide whether or not to accept the application. If the CBRC decides not to accept the application, it shall inform
in writing the applicant of the decision and give the reasons therefor; if the CBRC decides to accept the application, it shall,
within three month as of the day when the application is accepted, make a written decision on whether or not to approve the application.

Chapter III Operational Rules and Risk Management

Article 15

A financial institution shall, according to its own operational objectives, capital strength, risk management capacity and features
of risks in securitization businesses of credit assets, determine whether or not to engage in the securitization businesses of credit
assets, as well as the methods of engagement and the scale.

Article 16

A financial institution shall, before carrying out the securitization businesses of credit assets, fully identify and assess potential
credit risks, interest rate risks, fluidity risks, operational risks, legal risks, reputation risks and etc., and shall set up corresponding
internal examination and approval procedures, business process system, risk management and internal control system; and the procedures
for disposing of the securitization businesses of credit assets and managing the risks therein shall be subject to the examination
and approval of its credit management department, funds transaction department, risk management department, legal affair department
or regulation compliance department, financial department, settlement department, and other relevant department, and where necessary,
may be subject to the approval of the board of directors or a special committee as authorized thereby.

Article 17

A financial institution shall be fully aware of the obligations and duties that shall be borne for its engaging in the securitization
businesses of credit assets, and shall, according to its specific role in the securitization businesses of credit assets and the
features of risks in securitization businesses of credit assets, set down corresponding risk management policies and procedures,
so as to continuously and effectively identify, measure, monitor and control risks in the securitization businesses of credit assets
and to avoid possible conflicts of interest resulted from two or more roles it performed in the securitization businesses of credit
assets.

A financial institution shall bring the risk management of securitization businesses of credit assets into its overall risk management
system.

Article 18

The board of directors and the senior management of a financial institution shall know the securitization businesses of credit assets
and the potential risks thereof, and determine the overall strategies and policies for the development of securitization businesses
of credit assets, and ensure the human and material resources, such as professional personnel, management information system and
accounting system, which are necessary for the securitization businesses of credit assets. The personnel engaged in the securitization
businesses of credit assets or the risk management shall fully understand the legal relationship, transaction structure of the securitization
businesses of credit assets as well as the main risks and the methods and techniques to control them.

Section I Promoters

Article 19

The credit assets to be securitized by a promoter of the securitization of credit assets shall meet the following requirements:

(1)

Having a comparatively high homogeneity;

(2)

Being able to produce predictable cash flow yields; and

(3)

Complying with the laws, administrative regulations and the relevant provisions as prescribed by the CBRC and other regulatory authorities.

Article 20

A promoter shall transfer credit assets on the basis of the conditions and clauses concerning fair market transaction, and may not
act against laws, administrative regulations, the relevant provisions as prescribed by the CBRC and other regulatory authorities,
and stipulations in the loan contract.

Article 21

A promoter shall accurately distinguish and appraise the risks transferred by way of securitization businesses of credit assets and
the remaining risks, and shall effectively monitor and control the remaining risks.

A promoter shall, according to the relevant provisions in Chapter IV of the present Measures, calculate and withdraw the capital for
the remaining risks.

Article 22

A promoter shall ensure that the trustee will remind the investment institutions at an eye-catching place of the prospectus on issuance
of asset-backed securities that the asset-backed securities do not represent the promoter’s liabilities, and the recourse of investment
institutions of asset-backed securities is only limited to the trust assets. The promoter will not assume obligations and duties
for other potential losses in the securitization businesses of credit assets except for those as promised in the relevant legal documents
on the securitization of credit assets, such as the trust contract or the loan service contract.

Section II Trustees of Special Purpose Trusts

Article 23

A trustee of special purpose trusts shall, within ten working days as of the date of issuance of asset-backed securities, report to
the CBRC the information on issuance of asset-backed securities and submit to the CBRC the relevant legal documents formally concluded
with the promoter, credit enhancement institution, loan service institution and other institution that provides service for the securitization
transaction of credit assets.

During the existence period of asset-backed securities, the trustee shall submit the reports on disclosure thereof to the CBRC.

Article 24

A trustee shall account for and manage the credit assets as the trust assets, its self-owned assets and other assets separately. The
trust assets in different securitization transactions shall be separately accounted and managed.

Article 25

Any of the following matters shall be reported to the CBRC by a trustee within five working days as of the date of occurrence:

(1)

The quality of credit assets as the trust assets has significantly changed, which may make it impossible to pay the yields derived
from asset-backed securities to investment institutions on schedule;

(2)

The trustee, loan service institution or capital custodian violates the relevant laws, administrative regulations, ministerial rules
or other legal documents on the securitization of credit assets, which may affect the payment of yields derived from asset-backed
securities on schedule;

(3)

The external credit enhancement institution is changed;

(4)

The credit rating of asset-backed securities or other risk exposure from securitization is changed;

(5)

The clearance repurchase occurs; or

(6)

Other matter as prescribed by the CBRC that may result in major losses to the securitization businesses of credit assets.

Article 26

Where a trustee terminates the performance of duties due to its leave, dismissal by the assembly of holders of asset-backed securities
or other circumstance as stipulated in the trust contract, the termination shall be reported to the CBRC within five working days.

A new trustee institution shall report the termination to the CBRC within five working days as of the day when the trust contract
is concluded, and submit the newly concluded trust contract as well as other relevant legal documents.

Article 27

Where a loan service institution is changed, the trustee shall timely notify the borrowers of the change, report it to the CBRC within
five working days and submit the newly concluded loan service contract.

Where a capital custodian is changed, the trustee shall report the change to the CBRC within five working days, and submit the newly
concluded capital custody contract.

Article 28

A trustee shall remind the investment institutions at an eye-catching place of the prospectus on issuance of asset-backed securities
that the asset-backed securities only represent the corresponding shares of beneficial rights to special purpose trusts but not the
trustee’s liabilities . The trustee shall bear the obligations of paying the yields derived from asset-backed securities to investment
institutions within the limit of the trust assets, and will not assume obligations and duties for other potential losses in the securitization
businesses of credit assets.

Section III Credit Enhancement Institutions

Article 29

For the purposes of the present Measures, the term “credit enhancement” shall refer to the credit protection provided through contractual
arrangements in the transaction structure of the securitization businesses of credit assets. A credit enhancement institution shall,
in light of its commitment to the obligations and duties in the relevant legal documents, provide a certain degree of credit protection
for other institutions that participate in the securitization businesses of credit assets, and assume corresponding risks in the
securitization businesses of credit assets.

Article 30

The credit enhancement may be provided by way of internal credit enhancement and/or external credit enhancement. The former shall
include but not limited to the over-collateralization, hierarchy of asset-backed securities, cash collateral account and spread account,
etc.; and the latter shall include but not limited to the standby letters of credit, guarantee and insurance, etc..

Article 31

A financial institution shall specify the conditions, degree and time limit of protection for the credit enhancement in the relevant
legal documents on the securitization of credit assets when providing credit enhancement, and clearly distinguish the obligations
and duties borne for credit enhancement from those for other roles it performs.

Article 32

A financial institution shall, within the scope of the laws, administrative regulations and the relevant provisions as prescribed
by the CBRC and other regulatory authorities, stipulate the conditions and clauses for the provision of credit enhancement as well
as the obligations and duties to be borne according to the conditions and clauses concerning fair market transaction.

Article 33

A credit enhancement institution shall ensure that the trustee disclose the credit enhancement arrangements for the securitization
businesses of credit assets and remind the investment institutions at an eye-catching place of the prospectus on issuance of asset-backed
securities that the credit enhancement is provided only within the scope as promised in the relevant legal documents on the securitization
of credit assets, and the credit enhancement institution will not assume obligations and duties for other potential losses resulted
from the securitization businesses of credit assets.

Article 34

A commercial bank shall calculate and withdraw the capital according to the relevant provisions in Chapter IV of the present Measures
when providing credit enhancement for the securitization businesses of credit assets.

Section IV Loan Service Institutions

Article 35

The term “loan service institutions” shall refer to the institutions that accept the entrustments of trustees and are responsible
for the management of loans in the securitization businesses of credit assets. A loan service institution shall be a financial institution
legally established in China which has the qualification for the management of loan-related businesses.

Article 36

A loan service institution can be a promoter in the securitization of credit assets. When a loan service institution is a promoter,
it shall conclude a loan service contract separately with the trustee.

Article 37

A loan service institution shall, according to the loan service contract concluded with the trustee institution, collect the principal,
interest and other yields derived from the securitized assets, and shall timely and sufficiently transfer them into the capital account
opened by the trustee institution at the capital custodian.

Article 38

A loan service institution shall set down policies and procedures for the management of securitized assets, and the duty of managing
loans shall be performed by a special operational department of the institution. A separate account shall be established for the
securitized assets so as to manage the securitized assets separately from its self-owned credit assets. The securitized assets in
different securitization transactions of credit assets shall be separately accounted for and managed as well.

Article 39

A loan service institution shall have necessary professional personnel and corresponding operational processing system and management
information system when performing the duty of loan service.

Article 40

The loan service fees shall be determined on the basis of the conditions and clauses concerning fair market transaction.

Article 41

A loan service institution shall ensure that the trustee will remind the investment institutions at an eye-catching place of the prospectus
on issuance of asset-backed securities of the fact that the loan service institution performs the duty of managing loans according
to the loan service contract does not mean that the loan service institution shall assume the obligations and duties for potential
losses resulted from the securitization businesses of credit assets.

Article 42

The CBRC will, according to the economic substance of the obligations and duties borne by a loan service institution in the securitization
businesses of credit assets, judge whether or not the risk exposure from securitization is formed. In case the risk exposure from
securitization is formed, the loan service institution shall calculate and withdraw the capital in accordance with the relevant provisions
in Chapter IV of the present Measures.

Section V Capital Custodians

Article 43

The term “capital custodian” shall refer to the institution that accepts the entrustments of trustees and is responsible for taking
care of the capital in trust accounts in the securitization businesses of credit assets.

The promoter or loan service institution in the securitization of credit assets may not act as the capital custodian for a same transaction.

Article 44

The trustee shall select a commercial bank that satisfies the following requirements as the capital custodian:

(1)

Having a special business department responsible for performing the duty of keeping the trust capital;

(2)

Having a sound capital custodian system and a risk management and internal control system;

(3)

Having the conditions and abilities for the safe keeping of the trust capital;

(4)

Having enough full-time personnel who are familiar with the business operations regarding safekeeping of trust capital;

(5)

Having a safe and efficient settlement and clearing system;

(6)

Having business premises, safety measures and other facilities as required for keeping the trust capital; and

(7)

Having no major irregularities within the latest three years.

Article 45

A capital custodian shall set up separate accounts for each trust capital in the securitization of credit assets and manage them separately,
and shall strictly separate the trust capital under its custody from its self-owned assts or any other assets it manages.

Article 46

Where a capital custodian, within the interval for paying yields derived from credit assets to the investment institutions of asset-backed
securities, finds that any investment instruction for managing the yields from credit assets violates any law, administrative regulation,
any other relevant provision or the contract on keeping the capital, it shall report the violation to the CBRC.

Section VI Investment Institutions of Asset-backed Securities

Article 47

If a financial institution can buy and sell government bonds or financial bonds under the laws, administrative regulations or the
relevant provisions as prescribed by the CBRC and other regulatory authorities, it may also invest in asset-backed securities within
the scope as prescribed by the laws, administrative regulations as well as by the relevant provisions of the CBRC and other regulatory
authorities.

Article 48

A financial institution that invests in asset-backed securities shall be fully aware of the potential credit risks, interest rate
risks, fluidity risks, legal risks and etc., and shall formulate corresponding policies and procedures for investment management,
and establish a business process system, a management information system as well as a risk control system for making investment in
the asset-backed securities.

The personnel participating in the investment in and risk management of asset-backed securities shall fully know the transaction structure,
the status of asset pool, the situation of credit enhancement and credit rating as well as other information, and make an investment
decision based thereon, and shall analyze risk features of asset-backed securities and apply relevant risk management methods and
techniques to control the risks.

Article 49

A financial institution that invests in asset-backed securities a will face potential credit risks of the assets in asset pool. The
financial institution shall, according to the clients, regional and industrial characteristics of the assets in asset pool, bring
the aforesaid credit risks into its uniform credit risk management system, which includes the management of risk concentration.

Article 50

A financial institution that invests in asset-backed securities shall apply the internal quota management, and shall, according to
its risk prefer

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