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China Regulates Overseas Loans of Banking Financial Institutions

Mon, 25 Oct 2021
Categories: China Legal Trends

The People's Bank of China and the State Administration of Foreign Exchange issued the proposed “Provisions on Issues Concerning Overseas Loan Business of Banking Financial Institutions” (Draft for Public Comment) (hereinafter “the Provisions”, 关于银行业金融机构境外贷款业务有关事宜的规定(征求意见稿)), and gather public opinions from 18 Sept. 2021 to 3 Oct. 2021.

According to the Provisions, overseas loan business refers to the act of domestic banks with the capacity of international settlement business, within their approved business scope, to directly grant loans in CNY and foreign currencies to overseas enterprises, or indirectly grant loans in CNY and foreign currencies for more than one year to overseas enterprises by providing funds to overseas banks or otherwise, excluding trade financing in actual cross-border trade settlements handled by banks.

The Provisions puts the overseas CNY loan and foreign exchange loan business under a unified policy framework and encourages domestic banks to provide overseas loans in domestic currency. According to the Provisions, domestic banks can directly provide overseas CNY loans to overseas enterprises within their approved business scope, and the entities eligible for the provision of overseas loans are no longer limited to "going out" projects. As for the loan providing method, domestic banks may provide medium- and long-term funds to overseas banks for more than one year in accordance with the need to handle overseas loans.

 

 

Cover Photo by Andy Guan (https://unsplash.com/@andygp) on Unsplash

Contributors: CJO Staff Contributors Team

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