State Administration of Foreign Exchange, Foreign Exchange Administration Issues Relevant to Auto Finance Companies Circular

Issued: July 15 2004
Effective: August 20 2004
Interpreting authority: State Administration of Foreign Exchange

Main contents: Item One lists the application documents and materials required for opening foreign exchange capital fund accounts with designated foreign exchange banks in China by wholly foreign-owned or Sino-foreign equity joint auto finance companies. Auto finance companies may not open more than three foreign exchange capital fund accounts. Scope of income for capital fund accounts of auto finance companies shall be remittance of registered capital by foreign investors; while scope of expenditure of such accounts shall be bank deposits, payments to foreign entities for current account items and other foreign exchange expenditure verified by the branch or sub-branch of the State Administration of Foreign Exchange at the locality (SAFE Branch or Sub-branch) (Item Two). Items Four and Ten respectively list the documents required for settlement of foreign exchange funds in foreign exchange capital fund accounts and the documents required for purchase of foreign exchange for payment of profit to foreign shareholders by auto finance companies. The renminbi equivalents of each application for settlement of foreign exchange by an auto finance company shall, in principle, not exceed the difference between its total amount of renminbi funds with designated purposes for the most recent three months and its total amount of existing renminbi funds. The purposes for settlement of foreign exchange funds by auto finance companies are limited to provision of loans for purchase of vehicles, payment of their ordinary operating expenses and other purposes approved by the SAFE Branch or Sub-branch (Item Five). Auto finance companies shall not use foreign exchange capital funds that are not yet settled for the purpose of renminbi loans secured by pledge of foreign exchange (Item Six). Auto finance companies may only release renminbi loans and receive renminbi from clients when they repay the loan principal and interest (Item Eight). Auto finance companies shall comply with the relevant provisions of the Administration of Auto Finance Companies Procedures, and may not absorb foreign exchange deposits from domestic shareholders, issue foreign debts nor provide security to foreign entities (Item Nine).
Related legislation: Ministry of Finance and State Administration of Foreign Exchange, Further Strengthening the Work of Capital Verification for Foreign-invested enterprises and Improving the System of Registration of Foreign Capital and Foreign Exchange Circular, Mar 13 2002, CLP 2002 No.4 p7; China Banking Regulatory Commission, Administration of Auto Finance Companies Procedures, Oct 3 2003, CLP 2003 No.9 p34; People's Bank of China, Declaration of Balance of Payments Statistics Procedures, Sep 14 1995, CLP 1995 No.10 p9; Rules of Business Operation for Declaration of Balance of Payments Statistics Through Financial Institutions; Rules of Business Operation for Declaration of Overseas Assets and Liabilities as well as Profit and Loss by Financial Institutions and PRC Foreign Exchange Control Regulations (Amendment), Jan 14 1997, CLP 1997 No.2 p7