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The Standing Committee of the National People’s Congress Order of the President of the People’s Republic of China No.47 Adopted by the Standing Committee of the Eighth National People’s Congress in l995 President of the People’s Republic of China: Jiang Zemin May 10, 1995 Commercial Bank Law of the People’s Republic of China Chapter I General Provisions Article 1 This Law is formulated to protect the legitimate rights and interests of commercial banks, depositors and other clients, standardize Article 2 The commercial banks referred to in this Law are bodies corporate established in accordance with this Law and the Company Law of the Article 3 A commercial bank may engage in some or all of the following businesses: (1) receiving money deposits from the public; (2) extending short, medium and long-term loans; (3) providing domestic and international settlement services; (4) discounting bills; (5) issuing financial bonds; (6) acting as agent of issuing, cashing and underwriting government bonds; (7) dealing in government bonds; (8) inter-bank call-money business; (9) dealing or acting as agent in foreign exchange transactions; (10) providing L/c service and guarantee; (11) acting as agent in collection and payment and insurance business; (12) providing safe deposit box service; (13) other businesses approved by the People’s Bank of China. The business scope of a commercial bank is defined by the statute thereof and reported to the People’s Bank of China for approval. Article 4 A commercial bank operates independently, takes up responsibility for all risks it may encounter and for its own profits and losses A commercial bank shall conduct its business in accordance with the law, free from interference by any department or individual. A commercial bank shall assume civil responsibilities independently with its entire assets as a body corporate. Article 5 A commercial bank shall abide by the principle of equality, voluntariness, fairness, honesty and good faith in doing business with Article 6 A commercial bank shall protect its depositors’ legitimate rights and interests from encroachment by any organization or individual. Article 7 In doing credit business, a commercial bank shall strictly examine the credibility of a borrower and persist in extending loans against A commercial bank is protected by law to retrieve the principal and interests of a loan from the borrower thereof in accordance with Article 8 A commercial hank shall abide by the relevant provisions of the law and administrative decrees and regulations in doing business and Article 9 A commercial bank shall abide by the principle of fair competition in doing its business and refrain from unfair competition. Article 10 A commercial bank shall be subject to supervision and administration by the People’s Bank of China in pursuance of the law. Chapter II Establishment and Organization of A Commercial Bank Article 11 The establishment of a commercial bank shall require the examination and approval by the People’s Bank of China. No organization or individual shall receive money deposits from the public or do any other businesses of a commercial bank or use Article 12 The establishment of a commercial bank shall satisfy the following requirements: (1) having its statute in pursuance of this Law and the Company Law of the People’s Republic of China; (2) having the minimum registered capital defined by this Law; (3) having chairman of directors (president), general manager and other senior managerial personnel with expertise and professional experience (4) having complete organization and management; (5) having up-to-standard business site, safety measures and other facilities relevant with the business thereof. The People’s Bank of China in examining the application for the establishment of a commercial bank should take into account the need Article 13 The minimum registered capital for the establishment of a commercial bank shall be RMB one billion yuan (RMB 1,000,000,000 yuan). The People’s Bank of China may readjust the floor amount of the registered capital necessary for the establishment of a commercial Article 14 The applicant shall apply to the People’s Bank of China for the establishment of a commercial bank by submitting the documents and (1) an application for the establishment of a commercial bank, specifying the name, location, registered capital and business scope of (2) a feasibility study report; (3) other documents and information required by the People’s Bank of China. Article 15 The application having been examined to be in compliance with the provisions of Article 14 of this Law, the applicant shall fill (1) a draft of the statute of the commercial bank to be established; (2) qualification documents of the senior managerial staff to be employed; (3) a certificate of capital confirmation from a legitimate capital confirmation authority; (4) a list of the names, capital contributions and shares of the share holders of the commercial bank; (5) credit certificate and other relevant information of the share holders, each holding more than ten percent of the registered capital (6) the guideline and plan for the operation of the commercial bank; (7) information of the business site, safety measures and other facilities relevant with the business of the commercial bank; (8) other documents and information required by the People’s Bank of China. Article 16 Having been approved for establishment, the commercial bank shall be issued banking permit by the People’s Bank of China and with Article 17 The Company Law of the People’s Republic of China is applicable to the form and structure of the organization of a commercial bank. A commercial bank which was established prior to the promulgation of this Law may follow the original provisions if its organizational Article 18 A commercial bank solely owned by the state shall have a board of supervisors. The Board of Supervisors shall be composed of representatives The Board of Supervisors shall exercise control of the solely state-owned commercial banks over the quality of credit funds, the ratio Article 19 A commercial bank may set up its branches within and outside the territory of the People’s Republic of China in keeping with its business A commercial bank in setting up a branch within the territory of the People’s Republic of China shall allocate to it a working capital Article 20 For the establishment of a branch, the applying commercial bank shall submit the documents and information listed below: (1) an application for establishing a commercial bank branch whereby should be specified the name, amount of working capital, business (2) a financial report of the last two years of the applicant; (3) certificates of qualifications of the senior managerial officials to be appointed; (4) the business guideline and plan; (5) information related to the business site, safety measures and other facilities relevant with the business thereof; (6) other documents and information required by the People’s Bank of China. Article 21 Having been approved to be established, a commercial bank branch shall be granted a banking permit by the People’s Bank of China, Article 22 A commercial bank shall apply to its branches a financial system of unified accounting and centralized fund allocation and level-by-level The branch of a commercial bank shall not be qualified as a body corporate and it shall do business within the scope authorized by Article 23 Having been approved to be established, a commercial bank and its branches shall be announced to the public by the People’s Bank of When a commercial bank or its branch has not started operation for over six months from the date of being granted a business license Article 24 In the event of one of the changes listed below, a commercial bank shall need to obtain the approval from the People’s Bank of China: (1) change of the name of the commercial bank; (2) change of the registered capital; (3) change of the business sites of the head office and/or its branch(es) of the bank; (4) readjustment in business scope; (5) change of share holders, each holding more than ten percent of the total capital or total shares of the commercial bank; (6) revision of the statute; (7) other changes specified by the People’s Bank of China. When a commercial bank needs to replace its chairman of the board of directors, or general manager with a new one, the qualifications Article 25 The Company Law of the People’s Republic of China is applicable to the split and merger of commercial banks. The split or merger of commercial banks shall require the examination and approval by the People’s Bank of China. Article 26 A commercial bank shall use the banking permit pursuant to law and administrative decrees and regulations. It is prohibited to counterfeit, Article 27 Anyone who has one of the following backgrounds shall not be fit for high managerial positions in a commercial bank: (1) having once been sentenced to punishment for the crimes of embezzlement, bribery, illegal possession of property, misappropriation (2) having served as a director of the board of directors, the director or manager of a company which went bankrupt because of mismanagement (3) having been the legal representative of a company whose business license had been revoked on account of violation of the law and having (4) having failed to repay a fairly large debt already due. Article 28 Any organization or individual intending to buy more than ten percent of the shares of a commercial bank shall have to obtain the Chapter III Protection of Depositors Article 29 A commercial bank in its savings deposit business shall abide by the principle of voluntariness in depositing, freedom of withdrawal, With regard to savings deposits of individuals, a commercial bank has the right to reject the demand of any department or individual Article 30 With regard to deposits of any organization, a commercial bank has the right to reject the demand of any other organization or individual Article 31 A commercial bank shall fix its interest rates for deposits pursuant to the ceiling and floor of interest rates defined by the People’s Article 32 A commercial bank shall place a required reserve with the People’s Bank of China and keep adequate standby reserve in accordance with Article 33 A commercial bank shall guarantee the payment of the principal and interests of every deposit and shall not delay or refuse the payment Chapter IV Basic Principles for Loans and Other Businesses Article 34 A commercial bank shall conduct its loan business in accordance with the need for the development of the national economy and social Article 35 A commercial bank shall conduct strict examination of the usage, capability and form of repayment as well as other relevant matters A commercial bank shall implement a system in which the examination and the actual extending of a loan are conducted by separate departments Article 36 A commercial bank shall extend a loan against a security, and conduct strict examination of the repaying capability, the ownership A borrower may be exempted from securities after the commercial bank has conducted examination and found it to have a high credit Article 37 A commercial bank shall sign a written contract with its borrower on the extending of a loan. The contract shall specify the category, Article 38 A commercial bank shall fix its interest rates for loans in accordance with the ceiling and floor for the rates of interest for loans Article 39 A commercial bank in its loan business shall abide by the regulations on the ratios of assets and liabilities listed below: (1) the capital adequacy rate shall not fall short of eight percent; (2) the ratio of the outstanding balance of loans to that of deposits shall not exceed seventy-five percent; (3) the ratio of the outstanding balance of liquid assets to that of liquid liabilities shall not fall short of twenty-five percent; (4) the ratio of the outstanding balance of loans to one borrower to that of the capital of the bank shall not exceed ten percent; (5) other stipulations by the People’s Bank of China on asset and liability management. When a commercial bank which was established prior to the promulgation of this Law is found to have its ratios of assets and liability Article 40 A commercial bank shall not extend unsecured loans to related persons; and shall not provide related persons with secured loans on The related persons mentioned in the previous paragraph refer to: (1) the members of the board of directors, members of the board of supervisors, managerial personnel and staff of the credit business (2) the company, enterprise or other economic organization wherein the aforesaid persons have made investment or assumed senior managerial Article 41 No organization or individual may force a commercial bank to extend a loan or provide guarantee for a loan. A commercial bank shall A commercial bank owned solely by the state should provide loans for special projects approved by the State Council. Losses resulting Article 42 A borrower shall repay the principal and interest of a loan on schedule. When a borrower fails to repay a secured loan, the commercial bank has the right to be repaid the principal and interest of the loan A borrower shall assume the responsibility for failure to repay the unsecured loan falling due in accordance with the contract thereof. Article 43 A commercial bank shall not engage in trust investment or stock business, or invest in real estate not for its own use within the A commercial bank shall not invest in non-bank financial institutions or enterprises within the People’s Republic of China. A commercial Article 44 A commercial bank in handling settlements such as acceptance, remittance and collection shall make timely cashing and entries pursuant Article 45 A commercial bank shall apply for approval for issuing financial bonds or seeking loans outside China in accordance with the law and Article 46 Inter-bank loan shall be subject to the time limit defined by the People’s Bank of China and the maximum time for such financing shall The call money for lending shall be only the idle fund after depositing required reserve, leaving adequate standby reserve and repayment Article 47 A commercial bank shall not receive money deposits or extend loans by raising or lowering interest rates or by other unjustifiable Article 48 An enterprise or undertaking may open a principal account with a commercial bank of its own choice for day to day transfer and settlement No organization or individual shall deposit the fund of an organization in an account opened in the name of an individual. Article 49 A commercial bank shall fix its business hours to the convenience of its clients and make public announcement thereof. A commercial Article 50 A commercial bank shall collect commission fees on handling business and providing services in accordance with the stipulations of Article 51 A commercial bank shall preserve all the financial statements, business contracts and other information for a specified period in Article 52 The staff of a commercial bank shall abide by the law, administrative decrees and regulations and other rules for the administration (1) taking advantage of their positions to demand or accept bribes, or violating relevant state regulations to accept commissions or service (2) taking advantage of their positions to commit embezzlement, misappropriation or unlawful possession of the funds of the bank or of (3) providing loans or guarantee to relatives or friends in violation of regulations; (4) holding positions concurrently at other economic institution(s); (5) other acts in violation of the law, administrative decrees and regulations and rules in business management. Article 53 The staff of a commercial bank shall not disclose state secrets or commercial secrets which they come into possession during their Chapter V Financial Accounting Article 54 A commercial bank shall establish and improve its financial accounting system in accordance with the law and the state unified accounting Article 55 A commercial bank shall, in accordance with relevant state regulations, truthfully and in an all-round way record and reflect its Article 56 A commercial bank shall announce its business performance and audited statement of the previous fiscal year within three months after Article 57 A commercial bank shall retain a reserve against bad and doubtful accounts and write off bad debts in pursuance of relevant state Article 58 The fiscal year of a commercial bank begins on the first of January and ends on the thirty-first of December of the Gregorian calendar. Chapter VI Supervision and Administration Article 59 A commercial bank shall formulate its business rules, establish and improve its business management, the system of cash control and Article 60 A commercial bank shall establish and improve its systems of examining and checking deposits, loans and settlement, bad and doubtful A commercial bank shall conduct regular examination and checks on its branches. Article 61 A commercial bank shall periodically submit to the People’s Bank of China balance sheets, profit and loss statements and other financial Article 62 The People’s Bank of China is authorized to exercise examination of and supervision over the deposits, loans, settlements and bad Article 63 A commercial bank is subject to the audit control by the auditing authorities in accordance with the audit law and regulations. Chapter VII Takeover and Termination Article 64 When a commercial bank is in or is liable to be in a credit crisis thus seriously threatening the interests of the depositors, the The purpose of the takeover is to take necessary measures with regard to the commercial bank taken over in order to protect the interests Article 65 The People’s Bank of China shall determine a takeover and organize its implementation. The People’s Bank of China shall specify the (1) the name of the commercial bank to be taken over; (2) the reason(s) for the takeover; (3) the organization of the takeover; (4) the time limit of the takeover. The decision for the takeover shall be made public by the People’s Bank of China. Article 66 A takeover begins on the day of implementation of the takeover decision. The organization in charge of the takeover shall begin exercising the power over the management of the commercial bank from the day Article 67 On expiration of the term of the takeover, the People’s Bank of China may determine to prolong the takeover, but the term shall not Article 68 Takeover shall be terminated in any of the following cases: (1) that the term of the takeover expires or the prolonged term of takeover determined by the People’s Bank of China expires; (2) that prior to the expiration of the term of takeover, the commercial bank has recovered its capacity of normal operation; or (3) that prior to the expiration of the term of takeover, the commercial bank has been merged or declared bankrupt in accordance with Article 69 When a commercial bank splits, or merges with another one, or dissolves on reasons for dissolution pursuant to the statute of the A liquidation group shall be formed to conduct liquidation and repayment of the principals and interests of deposits shall be made Article 70 When a commercial bank is closed down by order on account of its banking permit having been revoked, the People’s Bank of China shall Article 71 When a commercial bank is incapable of repaying its mature debts, may, with the consent of the People’s Bank of China, be declared At the time of bankruptcy liquidation, a commercial bank shall give priority to paying the principal and interests of savings deposits Article 72 A commercial bank shall be terminated on account of dissolution, being closed down by order or declared bankrupt. Chapter VIII Legal Liability Article 73 A commercial bank shall assume the responsibility of paying interest accrued and other civil responsibilities of compensation for (1) delaying or refusing repayment of the principal and interests of a deposit with no proper reason; (2) refusing to cash checks and to debit or credit accounts in violation of regulations regarding bill acceptance and other settlements
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