Administrative Measures for Borrowing International Commercial Loans by Domestic Institutions
Administrative Measures for Borrowing International Commercial Loans by Domestic Institutions
Administrative Measures for Borrowing International Commercial Loans by Domestic Institutions
Hui Zheng Fa Zi [97] No.6
September 24, 1997
Chapter I General Provisions
Article 1 These Measures are formulated in accordance with the Regulations of the People's Republic of China on Foreign Exchange Control and other relevant provisions of the State Council for the purpose of improving the administration of the borrowing international commercial loans
Article 2 The term "international commercial loans" mentioned in these Measures refers to funds raised and borrowed by domestic institutions from financial institutions, enterprises, individuals or other economic organizations outside the Chinese territory or from financial institutions with foreign investment within the Chinese territory, which are subject to contractual obligations for repayment in foreign currency. Export credits, international financial leases, compensation trade repaid in foreign exchange, foreign exchange deposits of institutions and individuals out of the territory (excluding foreign exchange deposits in banks which are approved to conduct offshore banking business), project financing, financing under trade with the minimum term of 90 days and other types of foreign exchange loans shall be regarded and administered as international commercial loans.
Article 3 The People's Bank of China shall be the examination and approval organ of borrowing international commercial loans by domestic institutions.
The People's Bank of China shall authorize the State Administration of Foreign Exchange and its branches offices (hereinafter referred to as the foreign exchange bureaus) to be responsible for the examination, approval, supervision and administration of borrowing international commercial loans by domestic institutions.
Article 4 A domestic institution must obtain approval from the foreign exchange bureau for borrowing an international commercial loan. An international commercial loan agreement signed without the approval from the foreign exchange bureau shall be invalid. The foreign exchange bureau shall not undertake foreign debt registration. The bank shall not open a foreign debt special account for it and the loan principals and interests shall not be remitted abroad without authorization.
Article 5 Domestic institutions borrowing international commercial loans from foreign parties shall be restricted to:
1. Chinese-funded financial institutions authorized by the State Administration of Foreign Exchange to engage in foreign exchange loan business operations;
2. non-financial enterprise legal persons approved by the departments authorized by the State Council.
Article 6 A financial institution borrowing an international commercial loan shall conform to the provisions of the People's Bank of China on the administration of the ratio of foreign exchange equity-debt of financial institutions.
Article 7 A non-financial enterprise legal person directly borrowing an international commercial loan from a foreign party shall meet the following requirements:
1. having successively made profits over the previous three years, possessing an import-export business licence and engaging in an industry encouraged by the State;
2. possessing a sound and complete financial management system;
3. for a trade-type non-financial enterprise legal person, its net assets shall account for not less than 15 per cent of its total assets; for a non-trade-type non-financial enterprise legal person, its net assets shall account for not less than 30 per cent of its total assets;
4. the sum of the international commercial loan borrowed and the surplus of the guaranty provided to a foreign party shall not exceed 50 per cent of the equivalent foreign exchange of its net assets;
5. the sum of the foreign exchange loan and the surplus of foreign exchange guaranty shall not exceed the foreign exchange revenue created in the last financial year.
Article 8 A domestic institution shall borrow an international commercial loan on the basis of its own creditworthiness, and shall bear repayment responsibility of its own accord.
Article 9 In the borrowing of an international commercial loan from a foreign party, a domestic institution shall strengthen the control of cost. The total cost of its loan shall not exceed the total cost of a loan at the same period from a loan institution of the same credit grading on the international financial market.
The foreign exchange bureaus shall supervise and direct the cost control in the borrowing of international commercial loans by domestic institutions.
Article 10 A domestic institution borrowing an international commercial loan from a foreign party shall, in accordance with the provisions of the State Administration of Foreign Exchange, submit the foreign loan statement for the previous quarter and the annual report on the use of the international commercial loan to the foreign exchange bureau within the first ten days of each quarter.
Article 11 Foreign Exchange bureaus shall have the right to inspect the situations of the raising, using and repayment of international commercial loans by domestic institutions.
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Hui Zheng Fa Zi [97] No.6
September 24, 1997
Chapter I General Provisions
Article 1 These Measures are formulated in accordance with the Regulations of the People's Republic of China on Foreign Exchange Control and other relevant provisions of the State Council for the purpose of improving the administration of the borrowing international commercial loans
Article 2 The term "international commercial loans" mentioned in these Measures refers to funds raised and borrowed by domestic institutions from financial institutions, enterprises, individuals or other economic organizations outside the Chinese territory or from financial institutions with foreign investment within the Chinese territory, which are subject to contractual obligations for repayment in foreign currency. Export credits, international financial leases, compensation trade repaid in foreign exchange, foreign exchange deposits of institutions and individuals out of the territory (excluding foreign exchange deposits in banks which are approved to conduct offshore banking business), project financing, financing under trade with the minimum term of 90 days and other types of foreign exchange loans shall be regarded and administered as international commercial loans.
Article 3 The People's Bank of China shall be the examination and approval organ of borrowing international commercial loans by domestic institutions.
The People's Bank of China shall authorize the State Administration of Foreign Exchange and its branches offices (hereinafter referred to as the foreign exchange bureaus) to be responsible for the examination, approval, supervision and administration of borrowing international commercial loans by domestic institutions.
Article 4 A domestic institution must obtain approval from the foreign exchange bureau for borrowing an international commercial loan. An international commercial loan agreement signed without the approval from the foreign exchange bureau shall be invalid. The foreign exchange bureau shall not undertake foreign debt registration. The bank shall not open a foreign debt special account for it and the loan principals and interests shall not be remitted abroad without authorization.
Article 5 Domestic institutions borrowing international commercial loans from foreign parties shall be restricted to:
1. Chinese-funded financial institutions authorized by the State Administration of Foreign Exchange to engage in foreign exchange loan business operations;
2. non-financial enterprise legal persons approved by the departments authorized by the State Council.
Article 6 A financial institution borrowing an international commercial loan shall conform to the provisions of the People's Bank of China on the administration of the ratio of foreign exchange equity-debt of financial institutions.
Article 7 A non-financial enterprise legal person directly borrowing an international commercial loan from a foreign party shall meet the following requirements:
1. having successively made profits over the previous three years, possessing an import-export business licence and engaging in an industry encouraged by the State;
2. possessing a sound and complete financial management system;
3. for a trade-type non-financial enterprise legal person, its net assets shall account for not less than 15 per cent of its total assets; for a non-trade-type non-financial enterprise legal person, its net assets shall account for not less than 30 per cent of its total assets;
4. the sum of the international commercial loan borrowed and the surplus of the guaranty provided to a foreign party shall not exceed 50 per cent of the equivalent foreign exchange of its net assets;
5. the sum of the foreign exchange loan and the surplus of foreign exchange guaranty shall not exceed the foreign exchange revenue created in the last financial year.
Article 8 A domestic institution shall borrow an international commercial loan on the basis of its own creditworthiness, and shall bear repayment responsibility of its own accord.
Article 9 In the borrowing of an international commercial loan from a foreign party, a domestic institution shall strengthen the control of cost. The total cost of its loan shall not exceed the total cost of a loan at the same period from a loan institution of the same credit grading on the international financial market.
The foreign exchange bureaus shall supervise and direct the cost control in the borrowing of international commercial loans by domestic institutions.
Article 10 A domestic institution borrowing an international commercial loan from a foreign party shall, in accordance with the provisions of the State Administration of Foreign Exchange, submit the foreign loan statement for the previous quarter and the annual report on the use of the international commercial loan to the foreign exchange bureau within the first ten days of each quarter.
Article 11 Foreign Exchange bureaus shall have the right to inspect the situations of the raising, using and repayment of international commercial loans by domestic institutions.
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