Circular of China Banking Regulatory Commission Concerning the Printing and Distribution of the Interim Provisions on Administering Loan Companies Yin Jian Fa [2007] No. 6 Each banking regulatory bureau, state-owned commercial bank, joint stock commercial bank, China Postal Savings Bank, Beijing Rural China Banking Regulatory Commission constituted the Interim Provisions on Administering Loan Companies for the purpose of doing well Each banking regulatory bureau shall forward the present Circular to the branches of banking regulatory bureaus, urban commercial China Banking Regulatory Commission January 22, 2007 Interim Provisions on Administering Loan Companies Article 1 In accordance with the Banking Supervision Law of the People’s Republic of China, Law of the People’s Bank of China on Commercial Article 2 The term “loan company” means the non-banking financial institutions set up by domestic commercial banks and rural cooperative banks A loan company is a limited liability company solely invested by a domestic commercial bank or rural cooperative company. Article 3 A loan company is an enterprise with independent legal person status. It enjoys all property rights formed by its investments, enjoys The investors of a loan company have the right to enjoy the asset proceeds, make important resolutions and choose managers. Article 4 A loan company shall abide by the business principles of safety, liquidity and benefits, operate independently, undertake the risks Article 5 A loan company shall operate according to law, and its operation may not be interfered by any entity or individual. Article 6 A loan company shall conform to the laws and administrative regulations of the state, shall fulfill the financial guidelines and Chapter II Institution Establishment Article 7 The name of a loan company shall be composed of the administrative division, brand name, industry involved and organization form, Article 8 To set up a loan company, the following requirements shall be met: (1) Having the articles of association satisfying the related provisions; (2) Having registered capital of no less than 500, 000 Yuan, which shall be a lump-sum cash capital paid by the investor once for all; (3) Having professional and experienced senior managers; (4) Having professional and experienced employees; (5) Having the necessary organizational structure and management systems; (6) Having a business place, safety guarantee measures and other business-related facilities satisfying the related requirements; and (7) Other requirements as provisioned by the CBRC. Article 9 To set up a loan company, the investor shall satisfy the following requirements: (1) Being a domestic commercial bank or rural cooperative bank; (2) Having a registered capital of no less than RMB 5 billion Yuan; (3) Having a sound corporate governance and a perfect and effective internal control system; (4) Its main supervisory indicators satisfy the supervisory requirements; and (5) Other prudent requirements as provisioned by the CBRC. Article 10 The establishment of a loan company shall go through two phases, namely the preparatory establishment and the start of business. Article 11 An applicant shall submit the following documents and materials for the preparatory establishment of a loan company: (1) An application for preparatory establishment; (2) A feasibility study report; (3) A preparatory establishment plan; (4) The name list and resumes of the persons in charge of the preparatory establishment; (5) The non-local investor shall submit the balance sheets and the profit and loss statements of the recent 2 years, and the written opinions (6) Other materials as prescribed by the CBRC. Article 12 The maximum preparatory establishment period for a loan company shall be 6 months as of the approval date. If the applicant meets For applying for the start of business of a loan company, the applicant shall provide the documents and materials as follows: (1) An application for starting business; (2) A report on work of the preparatory establishment; (3) A draft of the articles of association; (4) A capital verification report as issued by a statutory capital verification institution; (5) The archival materials of the candidate senior managers; (6) The evidential materials proving the ownership or use right of the business place; (7) The compliance certificates for the safety and fire control facilities of the business place as issued by the public security and (8) Other materials as requested by the CBRC. Article 13 The application for the preparatory establishment of a loan company shall be accepted by the banking regulatory branch bureau or The application for the start of business of a loan company shall be accepted, examined and decided by the banking regulatory branch Article 14 A loan company may, establish county-based branch companies in light of the development of its businesses. The establishment of a The preparatory establishment plan of a branch company of a loan company shall be provided to the regulatory office for archival purposes. Article 15 A loan company or its branch company approved to start business shall be granted a financial permit by the decision-making organ Chapter III Organizational Structure and Business Management Article 16 A loan company is not required to set up the board of directors or board of supervisors, but shall set up a sound business management Article 17 The business management group of a loan company shall be independently decided by the investor and shall be reported to the banking Article 18 The articles of association of a loan company shall be drafted and modified by the investor and submitted to the banking regulatory Article 19 The board of directors of a loan company shall take charge of preparing business operation policies and business development plans. Article 20 Upon approval of the banking regulatory branch bureau or the banking regulatory bureau at the locality of the loan company, a loan (1) various loans; (2) the instruments discount; (3) the assets transfer; (4) the settlement under loans; and (5) other asset businesses as approved by the CBRC. No loan company may draw on deposits of the general public. Article 21 The operating fund of a loan company shall include paid-in capital and borrowed money from the investor. Article 22 In case a loan company carries out business operations, it shall aim at serving the farmers, agriculture and development of rural Article 23 A loan company shall follow the principle of small amount and dispersion, enlarge the coverage of loans and avoid the excessive centralization Article 24 A loan company shall intensify the management of loan risks, set up a scientific authorization and credit system, credit management Article 25 A loan company shall, according to the related provisions of the state, set up a prudent and normative asset classification system Article 26 A loan company shall set up a sound internal audit system, check and access the implementation of internal control system as well Article 27 A loan company shall adopt the uniform accounting system for financial enterprises of the state and set up a sound financial and Article 28 A loan company shall truthfully record and reflect its business activities and financial status in an all-round manner and prepare Article 29 A loan company shall report the accounting statements, statistical statements and other materials to the local banking regulatory Article 30 A loan company shall set up an information release system and release the information about its annual business operations, important Chapter IV Supervision Article 31 The business operations conducted by a loan company shall be under the supervision of the banking regulatory institution and shall Article 32 A banking regulatory institution shall conduct persistent and dynamic supervision over capital adequacy ratio, bad loan ratio, risk Article 33 A banking regulatory institution shall, in accordance with the capital adequacy status and asset quality status of a loan company, (1) In case the loan company’s capital adequacy ratio is above 8% and its bad loan ratio is below 5%, the banking regulatory institution (2) In case the loan company’s capital adequacy ratio is below 8% but above 4% or its bad loan ratio is above 5%, the banking regulatory (3) In case the loan company’s capital adequacy ratio decreases below 4% or its bad loan ratio is above 15%, the banking regulatory institution (4) In case the loan company fails to restructure effectively within the time limit and its capital adequacy ratio is below 2%, the banking Article 34 The local banking regulatory institution shall, according to the related laws and regulations, check and access the capital adequacy Article 35 A banking regulatory institution has the power to request an investor to intensify the supervision and inspection over the loan company Article 36 In case a loan company violates the present Provisions, the banking regulatory institution has the power to give it a warning of Article 37 In case a loan company or any of its employees goes against any law or regulation of the state during the process of business operation Article 38 In case a loan company or any of its employees is dissatisfied with the punishment decision as provided for by the banking regulatory Chapter V Change and Termination of Institutions Article 39 In case a loan company plans to change any of the following items, it shall be subject to the approval of the banking regulatory (1) to change its name; (2) to change its registered capital; (3) to change its dwelling place; (4) to amend its articles of association; or (5) any other modification items as provisioned by the CBRC. Article 40 A loan company shall apply for dissolution in the case of any of the following circumstances: (1) The business term as described in the articles of association expires, or any other dissolution cause as indicated in the articles (2) The shareholders make a resolution of dissolution; or (3) It is necessary for it to dissolve owing to merger or split-up. Article 41 With regard to the dissolution of a loan company, its investor shall conduct in accordance with the Law of the People’s Republic Article 42 In case a loan company is to be terminated as a result of dissolution or being cancelled, it shall hand back the financial permit Chapter VI Supplementary Rules Article 43 The term “rural areas” as mentioned in the present Provisions mean the counties (cities) and areas at and below the county (city) Article 44 In case a foreign-funded financial institution intends to set up a loan company in a rural areas, it shall comply with the present Article 45 In the case of other matters not included in the present Provisions, they shall be governed by the Banking Regulatory Law of the Article 46 The CBRC shall be responsible for interpreting the present Provisions. Article 47 The present Provisions shall go into effect as of the promulgation date. |
China Banking Regulatory Commission
2007-01-22