(Promulgated on January 7,1986 by the State Council)
CONTENTS
CHAPTER I GENERAL PROVISIONS
CHAPTER II THE CENTRAL BANK
CHAPTER III SPECIALISED BANKS
CHAPTER IV OTHER FINANCIAL INSTITUTIONS
CHAPTER V CONTROL OF CURRENCY ISSUE
CHAPTER VI CONTROL OF CREDIT FUNDS
CHAPTER VII CONTROL OF INTEREST RATES
CHAPTER VIII CONTROL OF DEPOSITS, LOANS AND SETTLEMENTS
CHAPTER IX HANDLING OF VIOLATIONS
CHAPTER X SUPPLEMENTARY ARTICLES
CHAPTER I GENERAL PROVISIONS Article 1. These Regulations are formulated in order to strengthen control over banks and other financial institutions, ensure the healthy Article 2. All banks and other financial institutions carrying on business such as deposits, loans, personal savings, discounting of bills, Article 3. The central bank, specialised banks, and other financial institutions shall conscientiously and thoroughly carry out national financial Article 4. Institutions other than financial institutions are prohibited from carrying on financial business.
CHAPTER II THE CENTRAL BANK Article 5. The People’s Bank of China is the State organ through which the State Council leads and controls the fiscal affairs of the nation, (1) Research and draw up national guidelines and policies for financial activities, and arrange for their implementation after approval; (2) Research and draw up draft financial legislation; (3) Formulate the basic regulations for financial business; (4) Control the issuing of currency,regulate currency circulation, and maintain currency stability; (5) Control interest rates on deposits and loans, and set the rate of exchange between renminbi and foreign currencies; (6) Devise State credit plans, exercise centralised control over credit funds, and exercise uniform control over the working capital (7) Control foreign exchange,bullion, and the State foreign exchange and gold reserves; (8) Examine and approve the establishment and dismantling and merger of specialised banks and financial agencies; (9) Lead, control,co-ordinate, supervise,and inspect the operations of specialised banks and other financial institutions; (10) manage the State Treasury, and issue government bonds on its behalf; (11) Control the shares, bonds and other securities of enterprises, and control the money market; (12) Engage in relevant international financial activities on behalf of the government. Article 6. In accordance with the provisions of the State laws and administrative regulations, the People’s Bank of China shall control the Article 7. The People’s Bank of China shall establish a council to be the principal policy-making body of the head office. The principal functions (1) To examine and consider financial guidelines and policy; (2) To examine and consider important matters relating to annual State credit plans, cash plans and foreign exchange plans; (3) To define principles for the establishment, dismantling and merger and the allocation of functions among specialised banks and (4) To investigate other important matters concerning the overall financial situation. Article 8. The People’s Bank of China shall establish branches and sub-branches in accordance with the requirements of economic development. Each branch and sub-branch of the People’s Bank of China shall carry out duties relevant to the People’s Bank of China in its area Article 9. The People’s Bank of China shall provide services to specialised banks and other financial institutions in such areas as allocation Article 10. The head office and branches and sub-branches of the People’s Bank of China shall be responsible for conciliation and arbitration Article 11. The People’s Bank of China shall not directly accept deposits from or provide loans to enterprises or individuals.
CHAPTER III SPECIALISED BANKS Article 12. In accordance with the requirements of national economic development, the State shall establish a number of specialised banks. Article 13. All specialised banks shall be independently accountable economic entities and shall independently exercise their official powers Article 14. Specialised banks shall carry out the following basic duties: (1) Formulate specific operational systems and procedures in accordance with the basic regulations for financial business; (2) Make decisions on loans to enterprises in accordance with State policy and State plans; (3) Vary interest rates within prescribed limits; (4) Be responsible for movement of funds within their own systems; (5) Carry out supervision of credit and supervision of settlements of accounts; (6) Exercise cash control in regard to account-holding units, in accordance with State provisions; (7) Carry out supervision of pay-roll funds of account-holding units, in accordance with State regulations; (8) Subject to authorisation by the People’s Bank of China, control the working capital of State enterprises; (9) In accordance with regulations, hold and dispose of retained profits; (10) With the approval of the State Council or the head office of the People’s Bank of China, engage in relevant international financial Article 15. Branches and sub-branches established by specialised banks shall comply with the following requirements: (1) They shall accord precisely with the requirements of economic development, and shall have operational capacity commensurate with (2) They shall conform with the limits of their allocated scope of business; (3) They shall have personnel qualified in financial operations and administration; (4) They shall conform with economic accounting principles. Head offices of specialised banks shall exercise vertical leadership over subordinate branches and sub-branches. Article 16. Head offices of specialised banks shall submit the following matters to the head office of the People’s Bank of China for examination (1) Matters of business guidelines and policy falling within the scope of Article 5, paragraph one, item (1) of these Regulations; (2) Matters outside the allocated scope of business; (3) Codes of business regulations falling outside current basic regulations for financial business, or involving other specialised (4) Formulation and amendment of articles of association; (5) Establishment of branches abroad. Items in the above paragraphs falling outside the scope of responsibility and jurisdiction of the central bank as prescribed in these Article 17. The following matters pertaining to branches and sub-branches of specialised banks shall be submitted to provincial branches of (1) Important business regulations formulated in the light of specific conditions in local areas of jurisdiction; (2) Major changes in the channelling of credit funds; (3) Matters involving other specialised banks in the same area of jurisdiction, requiring a uniformly prescribed system of business Article 18. Specialised banks shall, in accordance with provisions, provide the People’s Bank of China with reports on the performance of credit Article 19. The establishment of specialised bank branches and sub-branches shall be approved respectively in accordance with the following (1) Head offices, to be reviewed by the head office of the People’s Bank of China, and approved by the State Council; (2) Provincial branches, applications to be submitted by head offices of specialised banks to the head office of the People’s Bank (3) Local and municipal central sub-branches, and county branches, applications to be submitted by provincial bank branches to provincial (4) Operational units below the county branch level,applications to be submitted by district and municipal central sub-branches of Article 20. Head offices of specialised banks and branches, sub-branches and offices of specialised banks that have been approved for establishment Article 21. When specialised bank branches, sub-branches and offices that have been established with approval need to relinquish their licence,
CHAPTER IV OTHER FINANCIAL INSTITUTIONS Article 22. For the purposes of this Chapter, other financial institutions shall include trust and investment companies, rural credit co-operatives, The provisions of these Regulations relating to specialised banks are applicable to other financial institutions except where other Article 23. The establishment of other financial institutions, as well as fulfilling the conditions prescribed in Article 15 of these Regulations, Article 24. In large and middle-sized cities where a definite need exists, trust and investment companies may be established, to handle such The business activities of trust and investment companies shall be carried out in accordance with plans approved by the People’s Bank Article 25. Applications to establish trust and investment companies shall be submitted for approval according to the following provisions: (1) National trust and investment companies, to be reviewed by the head office of the People’s Bank of China, and approved by the (2) Provincial trust and investment companies, to be reviewed by provincial branches of the People’s Bank of China, and approved by (3) Local and municipal trust and investment companies, to be reviewed by local or municipal branches of the People’s Bank of China Article 26. Trust and investment companies established by specialised banks in large and middle-sized cities shall be independent legal entities, Where specialised banks carry out business in trusts without setting up independent trust and investment companies, the sources and Article 27. Credit co-operatives may be established in rural areas and in large and middle-sized cities. Credit co-operatives shall be co-operative Rural credit co-operatives shall operate deposits,loans, settlements and personal savings in rural areas. Urban credit co-operatives shall operate deposits, loans and settlements for urban street collective organisations and individual Control and approval procedures for credit co-operatives shall be separately determined by the People’s Bank of China. Article 28. Local levels of the People’s Government may not establish local banks. Individuals may not establish banks or other financial institutions, and may not carry on financial business.
CHAPTER V CONTROL OF CURRENCY ISSUE Article 29. Currency issue is to be controlled centrally and uniformly. The head office of the People’s Bank of China shall submit currency Article 30. Finance departments may not overdraw on the People’s Bank of China. The People’s Bank of China may not directly purchase government bonds. Article 31. Distribution of renminbi issue funds by issue treasuries at all levels of the People’s Bank of China shall be carried out according Article 32. Cash withdrawals by specialised banks from the People’s Bank of China shall be limited to the balance of their deposits in branches Cash deposits by specialised banks to the People’s Bank of China shall be transacted according to the cashier system of the People’s Article 33. Specialised banks shall carry out investigative studies on the circulation of currency, and submit regular reports to the People’s Article 34. Damaged renminbi notes and coins shall be exchanged by specialised banks in accordance with the provisions of the People’s Bank
CHAPTER VI CONTROL OF CREDIT FUNDS Article 35. Credit receipts and expenditures of specialised banks must, in accordance with the regulations, be included in State credit plans. Article 36. The source of People’s Bank of China credit funds shall be State treasury deposits. Administering banks may not use or transfer Financial depositing procedures for State authorities, non-governmental bodies, armed forces units, etc., shall be formulated by the Article 37. All deposits accepted by specialised banks shall be held in the deposit reserves of branches and sub-branches of the People’s Bank Article 38. Branches and sub-branches of the People’s Bank of China may extend loans to specialised banks within plans approved by higher level Article 39. Funds may be loaned between specialised banks. Article 40. Specialised banks shall establish reserves for bad debts. The amount of reserves for bad debts shall be determined by the head Article 41. The foreign exchange credit funds of specialised banks shall be controlled according to the State regulations for foreign exchange
CHAPTER VII CONTROL OF INTEREST RATES Article 42. Maximum interest rates for all deposits and minimum interest rates for all loans shall be formulated by the head office of the People’s All head offices of specialised banks shall have a prescribed authority to vary interest rates. The range within which interest rates The deposit and lending interest rates of credit co-operatives may be raised and lowered as prescribed and authorised by the People’s Article 43. In addition to being given preferential treatment by banks, interest subsidy procedures may be carried out for loans in respect of Article 44. Interest rates on deposits and loans between the People’s Bank of China and specialised banks shall be stipulated by the head office Article 45. The interbank rates between specialised banks shall be agreed upon through negotiation between the two parties.
CHAPTER VIII CONTROL OF DEPOSITS, LOANS AND SETTLEMENTS Article 46. The legitimate rights and interests of depositors are protected by the State, and depositors have independent control over the use Article 47. The State gives protection to the savings deposits of individuals, and practises the principles of voluntary deposit, freedom of Article 48. Loans issued by specialised banks shall be in strict compliance with examination and approval procedures and the responsibility Specialised banks have authority to inspect and supervise the way in which loans are utilised, and to inform themselves concerning Article 49. Specialised banks enjoy the right of independence. No unit or individual may compel them to issue loans, or obstruct the recovery Article 50. Specialised banks shall maintain sufficient payment capacity to ensure the timely repayment of debts. Article 51. The acceptance and discounting of bills by specialised banks shall be limited to bills issued through legal commercial action. Article 52. Specialised banks carrying out transfers of funds to settle accounts must uphold the legitimate rights and interests of both parties
CHAPTER IX HANDLING OF VIOLATIONS Article 53. Specialised bank branches and sub-branches or other financial institutions established without authorisation, in violation of the Article 54. Unauthorised use of Issue Treasury Funds in violation of the provisions of these Regulations shall be recovered, and investigation Article 55. When financial personnel take advantage of their office to make use of loans for their personal profit, investigation of administrative Article 56. When lending losses resulting from dereliction of duty by financial personnel occur, investigation of administrative and economic Article 57. If specialised bank branches and sub-branches, or other financial institutions are directed to issue loans, resulting in lending Article 58. The persons directly responsible in Articles 54 to 57 of this Chapter shall constitute criminal offenders, and investigation of Article 59. If specialised banks or other financial institutions, in violation of the provisions of these Regulations, make use of or transfer
CHAPTER X SUPPLEMENTARY ARTICLES Article 60. These Regulations are not applicable to financial institutions with joint Chinese and foreign capital or financial institutions Article 61. Supplementary regulations for the control of branches and sub-branches of specialised banks and other financial institutions in Article 62. The head office of the People’s Bank of China shall be responsible for interpreting these Articles; detailed provisions for the Article 63. These Regulations shall come into force on the date of promulgation.
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