CBIRC published guiding opinions on regulating non-licensed organizations in banking financial institutions. The term "banking financial institutions" in this guidance refers to financial institutions such as commercial banks and rural credit cooperatives established in the territory of the People's Republic of China as well as the state development banks and policy banks. The guidance became effective on the date of its issuance—that is, December 28, 2018.
The guidance consists of 13 articles, covering the basic principles, normative requirements, regulatory responsibilities, and transitional period requirements. Article 1 clarifies that the non-licensed institutions that regulate the banking financial institutions in different places should follow the basic principles and describes these principles. Articles 2 to 7 cover the definition and classification of off-site non-licensees, in accordance with the substance over form principle, according to different degrees of risk spillover and risk management needs. Articles 8 to 10 clarify that after the completion of the rectification, the local regulatory agency assumes the main supervisory responsibility of the licensee in a different place while the "legal person supervision agency" assumes the supervisory duties of the non-operating organization and the regulatory body to strengthen the supervision linkage. Articles 11 through 13 cover the regulatory requirements for the transition period.
The relevant regulatory requirements for banking financial institutions to establish non-operating institutions abroad are separately provided. Banking financial institutions shall regularly report the relevant situation of non-operating institutions in China to the legal person regulatory agency and the reporting frequency shall not be lower than once a year. The banking financial institutions shall, within three months from the date of issuance of this opinion, report the rectification plan of the non-licensed institutions in different places to the legal person supervision institution and complete the rectification within the transition period after approval. If there is any difficulty, the time limit for rectification may be appropriately postponed with the consent of the "legal person regulatory body."
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Effective Date: December 28, 2018
Keywords: Asia Pacific, China, Banking, Guiding Opinion, Regulation of Non-licensed Institutions, Banking Financial Institutions, CBIRC
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