The China Banking and Insurance Regulatory Commission (CBIRC) is seeking comments, until December 11, 2022, on the revised draft on Banking Supervision and Administration Law of the People's Republic of China. Additionally, the People’s Bank of China (PBC), in cooperation with CBIRC, the Ministry of Finance (MOF), the National Development and Reform Commission (NDRC), the Ministry of Industry and Information Technology (MIIT), and the State Administration for Market Regulation (SAMR), announced increased support for deferred repayment of loan principal and interest by micro and small businesses.
The revised draft on Banking Supervision and Administration Law applies to all banking financial institutions, including policy banks, commercial banks, rural credit cooperatives, financial asset management companies, trust companies, enterprise group finance companies, financial leasing companies, auto finance companies, consumer finance companies, currency brokerage companies, wealth management companies, and other financial institutions established within the territory of the People's Republic of China. The revisions in the revised draft are intended to, among other factors, improve prudential regulatory rules, strengthen behavioral regulation, improve shareholder compliance, and strengthen risk culture. The draft for comments aims to improve the risk disposal mechanism and make institutional arrangements in terms of daily supervision, early intervention, takeover, and bankruptcy liquidation. Compared with the existing regulatory framework on bank risk treatment, the notable changes in this revision clarify the discretion of CBIRC to require banks to formulate and implement recovery and resolution plans, improve daily supervision, including supervisory talks, risk warnings, and supervisory opinions, include newly added measures to limit the scale of risky assets and adjust the requirements for regulatory indicators, establish an early intervention mechanism and propose early intervention measures, and improve takeover and market exit mechanisms. The revised law also states that the banking regulatory agency shall review and approve major equity investment and issuance of capital instruments by banking financial institutions in accordance with the law and the specific measures shall be formulated by the banking regulatory agency of the State Council.
PBC, along with other regulatory bodies, issued this notice on deferred repayment of loan principal and interest to boost support for micro and small businesses and other market players, ensure the effective implementation of the package of policy measures and follow-up policies to stabilize the economy, and contribute to the stability of the national economy. The notice states that, for micro and small business loans that are due in the fourth quarter of 2022 (including business loans to self-employed businesses and to the owners of micro and small businesses) and facing temporary repayment difficulties due to the pandemic, the repayment of principal and interest may in general be postponed to June 30, 2023. However, such deferred loans accrue interest as normal and are exempt from penalty interest. Furthermore, the notice requires banking institutions to innovate deferral-friendly loan products and services, make greater use of financial technologies, anticipate the loan deferral needs of businesses, and provide them with tailored deferral plans, loan products that could be renewed online, and online channels for postponing loan payments. The banking institutions shall inform the public on the relevant policies, publicly display the requirements, documentations, procedures, and timeline of deferral applications and make the overall process easier for micro and small businesses.
Keywords: Asia Pacific, China, Banking, Liquidity Risk, Lending, Credit Risk, Deferred Repayment, Small and Micro Enterprises, Resolution Framework, Basel, Banking Supervision Law, CBIRC, PBC
Previous ArticleAPRA Proposes Amendments to APS 610, Issues Other Updates
The Board of Governors of the Federal Reserve System (FED) adopted the final rule on Adjustable Interest Rate (LIBOR) Act.
The European Central Bank (ECB) published an updated list of supervised entities, a report on the supervision of less significant institutions (LSIs), a statement on macro-prudential policy.
The Hong Kong Monetary Authority (HKMA) published a circular on the prudential treatment of crypto-asset exposures, an update on the status of transition to new interest rate benchmarks.
The European Commission (EC) adopted the standards addressing supervisory reporting of risk concentrations and intra-group transactions, benchmarking of internal approaches, and authorization of credit institutions.
The China Banking and Insurance Regulatory Commission (CBIRC) issued rules to manage the risk of off-balance sheet business of commercial banks and rules on corporate governance of financial institutions.
The Hong Kong Monetary Authority (HKMA) made announcements to address sustainability issues in the financial sector.
The European Banking Authority (EBA) published regulatory standards on identification of a group of connected clients (GCC) as well as updated the lists of identified financial conglomerates.
The General Board of the European Systemic Risk Board (ESRB), at its December meeting, issued an updated risk assessment via the quarterly risk dashboard and held discussions on key policy priorities to address the systemic risks in the European Union.
The Financial Conduct Authority (FCA) is seeking comments, until December 21, 2022, on the draft guidance for firms to support existing mortgage borrowers.
The Financial Stability Board (FSB) published a report that assesses progress on the transition from the Interbank Offered Rates, or IBORs, to overnight risk-free rates as well as a report that assesses global trends in the non-bank financial intermediation (NBFI) sector.