CBIRC issued "Measures for the Administration of Joint Credit Granting of Banking Financial Institutions (Trial Implementation)." As per the measures, when multiple banking financial institutions grant credit to the same company, they shall establish information-sharing mechanisms to jointly collect, aggregate, and cross-validate corporate operations and financial information. Corporate creditor banking financial institutions shall sign a joint credit member bank agreement and establish a joint credit committee. The measures shall come into force on the date of issue.
The joint credit committee shall monitor the situation concerning the operation and management of the enterprise, operational efficiency, investment in major projects, external guarantees, related transactions, cross-default, and other credit risk related conditions. All members of the joint credit committee shall sign a joint credit framework agreement (hereinafter referred to as the "bank-enterprise agreement") between banks and enterprises. The joint credit committee shall establish joint meeting system and a joint meeting shall be held once every quarter in principle. In the event of a major event, the lead bank or a member bank that accounts for more than one-third of the total amount of the creditor’s right of the member bank shall submit the temporary joint meeting. The joint credit committee shall monitor the situation concerning the operation and management of the enterprise, operational efficiency, investment in major projects, external guarantees, related transactions, cross-default and other credit risk related conditions.
The measures are intended to curb corporate long-term financing and over-financing and to effectively prevent and control major credit risks. They are formulated in accordance with the laws and regulations of the Banking Supervision and Administration Law of the People's Republic of China and the Law of the People's Republic of China on Commercial Banks. CBIRC intends to evaluate these measures in due course and will revise and improve them as necessary.
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Effective Date: June 01, 2018
Keywords: Asia Pacific, China, Banking, Credit Risk, Joint Credit Committee, Corporate Debt, CBIRC
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