(Approved by the People's Bank of China on September 8, 1997, and issued by the State Administration of Foreign Exchange on September 27, 1997)
Chapter I General Provisions
Article 1
For the purposes of enhancing the control of banking operations of foreign exchange, ensuring the healthy development of foreign exchange business and maintaining the stability of financial order and in accordance with the Law of the People's Republic of China on Commercial Banks and the Regulation of the People's Republic of China on the Control of Foreign Exchange, these Regulations are hereby formulated.
Article 2
For the purposes of these Regulations, banks mean the Chinese-capital banks and their branch bodies which, with approval of the People's Bank of China, are established in the territory of the People's Republic of China, including such banks as policy banks, wholly state-owned commercial banks, joint-equity commercial banks and urban cooperative banks and their branch bodies.
Article 3
Foreign exchange operations of banks shall conform to these Regulations.
Article 4
Banks may engage in all or part of foreign exchange operations listed below:
1. foreign exchange deposit;
2. foreign exchange loan;
3. foreign exchange remittance;
4. change of foreign currency;
5. international settlement;
6. inter-bank foreign exchange loan;
7. acceptance and discount of foreign exchange instruments;
8. foreign exchange borrowing;
9. foreign exchange guarantee;
10. foreign exchange settlement and sale;
11. issuance of negotiable securities denominated in foreign currencies other than stocks for their own or as agents;
12. selling or buying of negotiable securities denominated in foreign currencies other than stocks for their own or as agents;
13. selling or buying of foreign exchange for their own or for clients;
14. issuance of foreign exchange credit cards and issuance and payment of foreign credit cards as agents;
15. credit information, consultation and certification; and
16. other foreign exchange operations approved by the State Administration of Foreign Exchange.
The above-mentioned foreign exchange operations are defined by the State Administration of Foreign Exchange.
Article 5
The State Administration of Foreign Exchange and its branches and sub-branches (hereinafter cited as the foreign exchange authorities) are the authorities for the control of banking operations of foreign exchange and are responsible for the examination and approval, administration, supervision and inspection thereof.
Article 6
The State Administration of Foreign Exchange imposes the control according to the levels to the examination and approval of foreign exchange operations of banks.
Foreign exchange operations of the headquarters of banks are examined and approved by the State Administration of Foreign Exchange.
Preliminary examination and evaluation of foreign exchange operations of the branches and sub-branches of banks at or above the county level (not including the sub-branches at the county-level) are the responsibilities of the foreign exchange authorities at the provincial level and the operations are approved by the State Administration of Foreign Exchange.
Foreign exchange operations of the branch bodies of banks below the county level (including the sub-branches at the county-level, offices and savings offices) are examined and approved by the foreign exchange authorities at the provincial level.
Article 7
The business scope of the branch body of a bank may not go beyond the business scope of the body at the higher level.
Article 8
Foreign exchange operations of banks shall be approved by the foreign exchange authorities and carried on within the approved business scope. No bank may engage in foreign exchange operations without approval or beyond the scope.
Chapter II Applications for Foreign Exchange Operations
Article 9
If intending to initiate, expand or terminate foreign exchange operations, banks shall file applications with foreign exchange authorities.
Article 10
A bank may apply for initiation of foreign exchange operations if it satisfies the following conditions:
1. complying with the relevant provisions of laws, administrative regulations and financial rules, and having no act of harming the interests of the State and the interests of the social public and no record of substantial irregularity or economic loss; and
2. having the required amount of paid-in foreign exchange capital fund or operating fund.
The headquarter of a policy bank, wholly state-owned commercial bank or joint-equity commercial bank shall have the paid-in foreign exchange capital fund of not less than 50 million US dollars or an equivalent in any other freely convertible currency in its total amount of capital fund; and the headquarter of a urban cooperative bank shall have the paid-in foreign exchange capital fund of not less than 20 million US dollars or an equivalent in any other freely convertible currency in its total amount of capital fund.
The primary branch of a bank shall have the operating fund of not less than 5 million US dollars or an equivalent in any other freely convertible currency; the secondary branch of a bank shall have the operating fund of not less than 2 million US dollars or an equivalent in any other freely convertible currency; and the sub-branch of a bank shall have the operating fund of not less than 1 million US dollars or an equivalent in any other freely convertible currency;
3. having foreign exchange operators with qualifications acknowledged by the foreign exchange authorities and the number of the operators is compatible to the foreign exchange operations applied for.
Fifty percent of foreign exchange operators shall have two years experiences in foreign exchange business. Persons in charge of foreign exchange operations shall have an education at or above the level of polytechnic school, five years or more experiences in financial work or three years or more experiences in foreign exchange business and good business performance, and no act improper for engaging in financial work or no record of substantial error in their work;
4. having the site and equipment suitable for foreign exchange operations;
5. satisfying other conditions of the State Administration of Foreign Exchange.
Article 11
In applying for initiation of foreign exchange operations, the bank shall submit the following documents and materials:
1. application for initiation of foreign exchange operations;
2. feasibility study report for initiation of foreign exchange operations;
3. photocopies of the original and duplicate of business license issued by the People's Bank of China;
4. articles of association approved by the People's Bank of China;
5. capital verification report (the original) on its paid-in foreign exchange capital fund or foreign exchange operating fund issued by the certified public accountant firm designated by the foreign exchange authority, or document of promise for its foreign exchange operating fund issued by the headquarter of the bank;
6. name list and resumes of foreign exchange operators of the bank, and their qualification certificates issued by the foreign exchange authority;
7. regulations, rules and internal control system compatible to the foreign exchange operations applied for;
8. brief introduction to the site and facilities for foreign exchange operations; and
9. other documents and materials required by the State Administration of Foreign Exchange.
In addition to the above-mentioned documents and materials, the branch body of the bank shall also submit the document of approval of its headquarter for its foreign exchange operations and the acceptance report on the preparation for foreign exchange operations.
Article 12
Banks may apply for expansion or termination of foreign exchange operations in accordance with the need of their business development and their operation conditions.
Article 13
In applying for expansion of foreign exchange operations, the bank shall submit to the foreign exchange authority the following documents and materials:
1. application and feasibility study report for expansion of the scope of foreign exchange operations;
2. operating rules and internal control system for the foreign exchange operations planned to expand;
3. report on its foreign exchange operations;
4. name list and resumes of persons in charge of the foreign exchange operations and foreign exchange operators newly increased, and their qualification certificates for foreign exchange operations issued by the foreign exchange authority;
5. introduction to the site and facilities for the expanded scope of foreign exchange operations;
6. balance sheet and profit-loss statement in the preceding year (consolidated statement of foreign currencies and consolidated statement of domestic and foreign currencies);
7. photocopies of the original and duplicate of its business license and photocopy of the document of approval issued by the foreign exchange authority on foreign exchange operations;
8. capital verification report on the paid-in foreign exchange capital fund or foreign exchange operating fund issued by the certified public accountant firm designated by the foreign exchange authority or document of promise on foreign exchange operating fund issued by the headquarter of the bank if the expansion of foreign exchange operations needs to increase foreign exchange capital fund or foreign exchange operating fund as required;
9. latest inspection or evaluation report on its foreign exchange operations issued by the foreign exchange authority, or latest self-inspection report on foreign exchange operations; and
10. other documents and materials required by the State Administration of Foreign Exchange.
In addition to the above-mentioned documents and materials, the branch body of the bank shall also submit the document of approval issued by the headquarter on expansion of the scope of foreign exchange operations.
Article 14
In applying for termination of foreign exchange operations, the bank shall submit to the foreign exchange authority the following documents and materials:
1. application for termination of foreign exchange operations;
2. detailed explanations on termination of foreign exchange operations (including causes for the termination and treatment measures and steps to be taken after the termination);
3. latest balance sheet and profit-loss statement of the bank stamped by the certified public accountant firm designated by the foreign exchange authority (consolidated statement of foreign currencies and consolidated statement of domestic and foreign currencies);
4. document of the board of directors or the headquarter agreeing with the termination of foreign exchange operations; and
5. other documents and materials required by the State Administration of Foreign Exchange.
Article 15
Without approval of the foreign exchange authority, no bank may terminate its foreign exchange operations.
After its termination of foreign exchange operations is approved, the bank shall carry out the liquidation of foreign exchange claims and debts according to law.
Article 16
After receiving the documents and materials submitted by the bank according to Article 11, 13 or 14 of these Provisions, the foreign exchange authority shall reply in writing within 4 months from the date of receiving the application. The foreign exchange authority may return the application of the bank which fails to meet the requirements. The said bank may not file again the application on the same matter within 6 months from the date of returning the application.
Article 17
The term of validity of a document of approval for foreign exchange operations issued by the foreign exchange authority is three years.
The bank shall apply to the foreign exchange authority for anew examination and approval of its qualifications for foreign exchange operations 4 months prior to the expiry of the term of validity of the document of approval for foreign exchange operations.
Article 18
In applying for anew examination and approval of its qualifications for foreign exchange operations at the expiry of the term, the bank shall submit the following documents and materials:
1. written application;
2. summary report on the foreign exchange operations;
3. capital verification report on its foreign exchange capital fund or foreign exchange operating fund issued by the certified public accountant firm designated by the foreign exchange authority, or document of promise on its foreign exchange operating fund issued by the headquarter;
4. latest balance sheet and profit-loss statement (consolidated statement of foreign currencies and consolidated statement of domestic and foreign currencies);
5. latest inspection or evaluation report on its foreign exchange operations issued by the foreign exchange authority, or latest self-inspection report on its foreign exchange operations; and
6. other documents and materials required by the State Administration of Foreign Exchange.
Article 19
Within 30 days after receiving the document of approval of the foreign exchange authority on initiation, expansion or termination of foreign exchange operations or the document of approval for its qualifications after the expiry of the term, the bank shall go to the People's Bank of China to obtain or replace the business license by presenting the document of approval of the foreign exchange authority. If it fails to do so as scheduled, the document of approval ceases to be valid automatically.
Article 20
The foreign exchange operating fund of the branch body of the bank may be allocated or promised from the foreign exchange capital fund of the headquarter, however, the total amount of foreign exchange operating fund allocated or promised from the headquarter to the branch body may not exceed 60% of the total amount of its self-owned foreign exchange capital fund.
Chapter III Basic Rules for Foreign Exchange Operations
Article 21
Foreign exchange operations of banks conform to the operating principles of benefit, safety and liquidity, and follow the self-discipline mechanisms of autonomous operation, self-assumption of risks, self-responsibility for losses and profits and self-control.
Article 22
Foreign exchange operations of the headquarters of banks shall conform to the following provisions on the control of ratios or indexes:
1. The sum of total foreign exchange liabilities and the balance of foreign exchange guarantee may not exceed 20 times of its self-owned foreign exchange fund (including paid-in foreign exchange capital fund, various foreign exchange reserves and undistributed foreign exchange profits);
2. The ratio of current foreign exchange assets to current foreign exchange liabilities may not be lower than 60%;
3. The ratio of foreign exchange deposit to loan may not be higher than 85%;
4. The ratio of the balance of overdue foreign exchange loan to the balance of all foreign exchange loans may not be higher than 8%;
5. The ratio of the balance of bad and doubtful foreign exchange loan to the balance of all foreign exchange loans may not be higher than 5%;
6. The ratio of the balance of foreign exchange loan of bad accounts to the balance of all foreign exchange loans may not be higher than 2%;
7. The ratio of the sum of foreign exchange deposits in other banks and foreign currencies on hand to the balance of all foreign exchange deposits (the ratio of expendable fund) may not be lower than 5%;
8. The ratio of utilization of foreign exchange fund overseas (the ratio of the closing balance of fund utilization such as overseas loans, overseas investment and deposits overseas to the closing balance of foreign exchange assets) may not be higher than 30%;
9. The index of international commercial borrowing [the ratio of the international commercial borrowings on its own (including export credit) and overseas issuance of bonds (not including local and departmental commission) to the net amount of capital fund] may not be higher than 50%;
10. The ratio of medium and long term foreign exchange loans [the ratio of the closing balance of medium and long term foreign exchange loans with a term exceeding one year (not including one year) to the closing balance of all foreign exchange loans] may not be higher than 60%; and
11. Other ratios or indexes prescribed by the State Administration of Foreign Exchange.
Article 23
The headquarters of banks shall strengthen the control over the asset-liability ratio of their branch bodies and may, in accordance with their respective operations and risk control abilities, break down various ratios stipulated in the preceding article and stipulate and adjust the asset-liability ratio for their branch bodies, and report them to the foreign exchange authorities for the record.
Article 24
No bank may use the RMB capital fund or operating fund as the foreign exchange capital fund or foreign exchange operating fund;
Article 25
If a bank changes the foreign exchange capital fund or operating fund into RMB or uses RMB to purchase foreign exchange capital fund or operating fund, it shall be approved by the State Administration of Foreign Exchange.
Article 26
Any increase or decrease of the foreign exchange capital fund or foreign exchange operating fund of banks shall be approved by the State Administration of Foreign Exchange.
Article 27
Banks shall handle various foreign exchange operations for clients in accordance with the relevant provisions of the State on foreign exchange control.
Article 28
No bank may make a direct foreign exchange investment in the territory to a non-bank financial institution or an enterprise, and may invest in any real estate project not for its own use.
Article 29
Banks may establish agency relationship with domestic and foreign banks.
The headquarters of banks are responsible for the unified control of agency banks within their respective fields.
Article 30
The headquarters of banks shall, in a unified way, control overseas accounts of their respective fields, formulate the measures for control of overseas accounts and report them to the State Administration of Foreign Exchange for the record.
Branch bodies of banks shall open and utilize overseas accounts according to the measures for control of overseas accounts formulated by their headquarters.
Article 31
Banks must establish the credit line control system for inter-bank deposit and lending of foreign exchange funds, and shall report the principles for administration of determination of credit lines to the State Administration of Foreign Exchange for the record.
Article 32
Banks shall strictly comply with the regulations of the People's Bank of China on the control of exchange prices, deposits reserve funds, inter-bank lending and interest rates.
Chapter IV Supervision and Control
Article 33
The State Administration of Foreign Exchange enforces risk supervision and control on banking operations of foreign exchange.
The State Administration of Foreign Exchange may make adjustment to the ratios or indexes in Article 22 in accordance with the actual need.
Article 34
If, after obtaining or replacing the business license according to the provisions of Article 19, a bank fails to initiate foreign exchange operations within 6 months or in 6 consecutive months, it shall report to the foreign exchange authority within five working days after the period of 6 month. If the said bank has no justifiable reasons, the foreign exchange authority may cancel its qualifications for foreign exchange operations.
Article 35
All documents and materials submitted by banks to foreign exchange authorities must be authentic and complete.
Article 36
When deeming it necessary, the foreign exchange authority may require the bank, case by case, to report for approval, notify in advance or report for the record afterward for some foreign exchange operations.
Foreign exchange operations which are required to report for approval, notify in advance or report for the record afterward case by case are prescribed and adjusted by the State Administration of Foreign Exchange.
Article 37
At the time of approving the scope of foreign exchange operations, the foreign exchange authority may make special limitations on the applicable subject and scope of a specific foreign exchange operation.
Article 38
According to the need, the foreign exchange authority may make new limitations on the applicable subject and scope of a foreign exchange operation already approved and may also demand the bank to terminate a specific foreign exchange operation.
Article 39
When deeming it necessary, the foreign exchange authority may make special limitations on the formation of overseas agency bank and opening of overseas accounts.
Article 40
Foreign exchange authorities adopt the qualifications accreditation system for the persons in charge of foreign exchange operations and other foreign exchange operators of banks.
Article 41
Foreign exchange authorities announce the initiation, expansion, termination and cancellation of foreign exchange operations of banks and anew examination and approval of qualifications for foreign exchange operations at the expiry of the term.
Article 42
Foreign exchange authorities may, on their own or by designating certified public accountant firms, impose on-site special inspections and non-on-site inspections into banking operations of foreign exchange. Foreign exchange authorities may determine the items and time of inspections according to the need. The banks under inspection shall accept and cooperate therewith.
Article 43
Foreign exchange authorities impose the annual evaluation system on foreign exchange operations of banks. If the bank passes the evaluation, the foreign exchange authority issues the document thereto. The bank goes to the People's Bank of China to accomplish the annual inspection registration of foreign exchange operations of the business license according to the said document. Concrete measures are provided by the State Administration of Foreign Exchange separately.
Chapter V Financial and Statistical Statements
Article 44
Subject to the relevant regulations of the State, banks shall authentically record and comprehensively reflect their foreign exchange operation activities and financial conditions, submit statements of foreign exchange operations and financial statistics in time to foreign exchange authorities, and guarantee the statements to be complete, accurate and authentic.
Article 45
Subject to the relevant regulations, banks shall establish and improve their foreign exchange financial and accounting systems and implement the separate account system of foreign currencies.
Article 46
Foreign exchange assets-liabilities and profit-loss information with respect to foreign exchange operations of wholly-invested subordinate bodies established overseas by banks shall be reflected in the statements of the headquarters.
Article 47
Payments of funds of overseas accounts of banks shall be truthfully reflected in their domestic accounting books, consolidated into the accounts as required and checked as scheduled.
Chapter VI Legal Responsibility
Article 48
If a bank engages in foreign exchange operations without approval, the foreign exchange authority orders it to make corrections, confiscates its illegal gains therefrom and cancels its qualifications for foreign exchange operations; and in the case of a crime, criminal responsibility is demanded for according to law.
Article 49
If a bank expands the scope of foreign exchange operations without approval or continues to engage in the part of foreign exchange operations after the foreign exchange authority has already cancelled the said part, the foreign exchange authority orders it to make corrections, confiscates its illegal gains therefrom, if any, and concurrently imposes a fine exceeding one times and not exceeding five times of its illegal gains; if it has no illegal gains, imposes a fine exceeding RMB 100,000 yuan and not exceeding RMB 500,000 yuan; if the circumstance is serious or it fails to make corrections as scheduled, the foreign exchange authority orders it to rectify or cancels its qualifications for foreign exchange operations; and in the case of a crime, criminal responsibility is demanded for according to law.
Article 50
If a bank violates Article 20, 24, 25 or 26 of these Regulations, the foreign exchange authority orders it to make corrections, issues a public notice of criticism, confiscates its illegal gains therefrom, if any, and concurrently imposes a fine exceeding one times and not exceeding three times of its illegal gains; and if it has no illegal gains, imposes a fine exceeding RMB 50,000 yuan and not exceeding RMB 300,000 yuan.
Article 51
If a bank violates Article 27 of these Regulations, the foreign exchange authority gives punishment severely in accordance with the Regulation of the People's Republic of China on the Control of Foreign Exchange and relevant regulations.
Article 52
If a bank violates Article 28 of these Regulations, the foreign exchange authority orders it to make corrections, confiscates its illegal gains therefrom, if any, and concurrently imposes a fine exceeding one times and not exceeding five times of its illegal gains; if it has not illegal gains, imposes a fine exceeding RMB 100,000 yuan and not exceeding RMB 500,000 yuan; if the circumstance is serious or it fails to make corrections as scheduled, the foreign exchange authority orders it to rectify or cancels its qualifications for foreign exchange operations; and in the case of a crime, criminal responsibility is demanded for according to law.
Article 53
If a bank violates Articles 29 or 30 of these Regulations, the foreign exchange authority orders it to make corrections, revokes its foreign exchange account, issues a public notice of criticism and concurrently imposes a fine exceeding RMB 50,000 yuan and not exceeding RMB 300,000 yuan. If it evades foreign exchange through its overseas account or fails to use its overseas account as required, thus causing a fund loss, responsibility of the persons concerned shall also be demanded for.
Article 54
If a bank violates Article 32 of these Regulations, the foreign exchange authority orders it to make corrections, issues a public notice of criticism, confiscates its illegal gains therefrom, if any, and concurrently imposes a fine exceeding one times and not exceeding five times of its illegal gains; if it has no illegal gains, imposes a fine exceeding RMB 100,000 yuan and not exceeding RMB 500,000 yuan; and if the circumstance is serious, the foreign exchange authority orders it to rectify or cancels its qualifications for foreign exchange operations.
Article 55
If a bank violates Article 22 or 23 of these Regulations, the foreign exchange authority orders it to make corrections, issues a public notice of criticism, confiscates its illegal gains, if any, and concurrently imposes a fine exceeding one times and not exceeding three times of its illegal gains; and if it has no illegal gains, imposes a fine exceeding RMB 50,000 yuan and not exceeding RMB 300,000 yuan.
Article 56
If a bank violates Article 38 of these Regulations, the foreign exchange authority orders it to make corrections, issues a public notice of criticism, and may give penalties in accordance with other relevant regulations and rules.
Article 57
If a bank fails to submit the statement as required, the foreign exchange authority orders it to make corrections and gives penalties depending on the circumstances. If it fails to submit the statement as required once in a year, a warning is given thereto; if it fails to submit the statement as required twice in a year, a public notice of criticism is given thereto; if it fails to submit the statement as required three times in a year, a fine not exceeding RMB 30,000 yuan is imposed thereon; if it fails to prepare the statement as required or its statement is incomplete, a warning is given thereto and concurrently a fine not exceeding RMB 10,000 yuan is imposed thereon; and if it intentionally prepares false accounts or fails to prepare accounts, thus causing untrue statement or substantial omission, a public notice of criticism is given thereto and concurrently a fine exceeding RMB 50,000 yuan and not exceeding RMB 300,000 yuan is imposed thereon.
Article 58
If a bank fails to submit relevant documents and materials as required, the foreign exchange authority orders it to make corrections and issues a public notice of criticism. If it fails to make corrections as scheduled, it is imposed a fine exceeding RMB 10,000 yuan and not exceeding RMB 100,000 yuan.
Article 59
If a bank fails to cooperate with the foreign exchange authority in the inspection or evaluation, thus causing the impossibility of inspection or evaluation, the foreign exchange authority orders it to make corrections, issues a public notice of criticism and concurrently imposes a fine exceeding RMB 50,000 yuan and not exceeding RMB 300,000 yuan.
Chapter VII Supplementary Provisions
Article 60
The State Administration of Foreign Exchange may formulate the concrete measures for the banking operations of foreign exchange in accordance with these Regulations.
Article 61
Measures for the control of offshore operations of banks are provided by the State Administration of Foreign Exchange separately.
Article 62
The State Administration of Foreign Exchange is responsible for the interpretation of these Regulations.
Article 63
These Regulations enter into force on January 1, 1998. The Regulations on the Control of Banking Operations of Foreign Exchange promulgated by the State Administration of Foreign Exchange on January 1, 1993 and the Regulations on the Various Scopes of Banking Operations of Foreign Exchange and the Regulations on the Control of Foreign Exchange Assets-liabilities Ratios of Banks promulgated on April 15, 1993 are repealed simultaneously.
