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    CBIRC Releases Draft and Final Rules in December 2019 and January 2020

    January 14, 2020

    CBIRC published various draft (proposed) and final (or revised) rules in December 2019 and January 2020. CBIRC and PBC published a draft notice on rules related to cash management products, along with the questions and answers (Q&A) related to the notice. CBIRC issued amendments to regulations of the People's Republic of China on the administration of foreign banks as well as Q&A related to the amendments. CBIRC also promulgated draft interim rules on financial leasing companies and draft implementation rules on administrative licensing of non-bank financial institutions. Additionally, CBIRC has revised implementation rules on administrative licensing of foreign-funded banks.

    Revised Regulations on Administration of Foreign Banks—The amendments aim to implement the opening-up policy of the banking industry, further optimize the investment and operating environment of the banking industry, stimulate the vitality of foreign investment in the development of the Chinese banking industry, and promote the enhancement of the competitiveness of the banking industry. The revised regulations come into effect on the date of promulgation.

    Draft Notice on Rules Related to Cash Management Products—To strengthen the supervision and management of cash management products, promote development of commercial banks and wealth management subsidiaries of commercial banks, and protect the legitimate rights and interests of investors, CBIRC and PBC issued this notice. The key topics covered in the notice include definition of cash management products; product investment management requirements, specifying investment scope and investment concentration; product liquidity management and leverage management; and requirements for risk management of cash management products. The deadline for comments is January 13, 2020.

    Draft Interim Rule on Financial Leasing CompaniesThe draft interim rule clarifies the business scope, financing behavior, scope of lease items, and prohibited businesses or activities of the financial leasing companies. It requires that the financial leasing companies improve internal rules such as corporate governance, internal control, risk management, related-party transactions, and provisions and reserves. It strengthens the supervision of financial leasing companies and guides them to focus on their main businesses. It sets regulatory compliance requirements on financial leasing companies and specifies some prudent regulatory indicators, including the proportion of financial leasing assets, fixed income securities investment, leverage ratio, and business concentration. The deadline for comments is February 09, 2020.

    Draft Implementation Rules of CBIRC on the Administrative Licensing of Non-bank Financial Institutions—The proposed revisions to the implementation rules focus on the following three aspects and the deadline for comments is February 13, 2020:

    • Further regulate and strengthen the shareholding management of non-bank institutions to match with relevant policies
    • Further streamline administrative procedures and approval items, delegate power, and optimize licensing conditions and procedures
    • Further improve relevant rules and regulations, and tackle emerging issues in regulatory practices

    Revised Implementation Rules on Administrative Licensing of Foreign-funded Banks—The key revisions are intended to continue to promote the implementation of the opening up measures of the banking sector. The implementation rules are in line with the Regulations on the Administration of Foreign-funded Banks, allowing foreign banks to set up branches and subsidiaries with legal person status in China concurrently, removing the total asset requirement for foreign banks to set up business entities in China, and expanding the scope of major Chinese shareholders in Sino-foreign joint venture banks. Another intention is to continue to promote the streamlining of administration and delegation of powers and improve the business environment and to further strengthen prudential supervision. Where the State Council has other stipulations on the administrative licensing in specific areas such as the free trade zones, such stipulations shall be followed. These rules shall be implemented as of the date of promulgation.

     

    Related Links (in Chinese and English)

    Comment Due Date: January 13, 2020/February 09, 2020/February 13, 2020

    Effective Date: Promulgation Date

    Keywords: Asia Pacific, China, Banking, Insurance, Securities, Q&A, Foreign Banks, Wealth Management Products, Leasing, Financial Leasing, NBFI, Administrative Licensing, Governance, CBIRC, PBC

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