General Office of People's Bank of China, Questions Relevant to the Handling of the Letter of Credit and Letter of Guarantee Business by Foreign-funded Banks Circular

Issued: December 20 2001

Main contents: The Circular states that the prohibition on advance purchase of foreign exchange for letter of guarantee and stand-by letter of credit purposes continues to be valid (Item One). The Circular, however, permits purchase of foreign exchange for settlement of imports with a letter of credit (Item Two). Item Three of the Circular prohibits foreign-funded banks not allowed to engage in Renminbi business from taking Renminbi deposits from customers for issuing of letters of credit or letters of guarantee.