People's Bank of China, Administration of Foreign Exchange Reserve Deposits of Financial Institutions Provisions

Issued: October 29 2004
Effective: January 1 2005
Interpreting authority: People's Bank of China
Applicability: The Provisions are applicable to all financial institutions taking foreign exchange deposits in the territory of the PRC, including wholly state-owned commercial banks, share-system commercial banks, urban commercial banks, rural commercial (cooperative) banks, urban credit cooperatives, rural credit cooperatives, enterprise group finance companies, wholly foreign-owned banks, Sino-foreign equity joint venture banks, wholly foreign-owned finance companies, Sino-foreign equity joint venture finance companies, branches of foreign banks, and other financial institutions taking foreign exchange deposits (Article 2). "Foreign exchange reserve deposit" refers to the deposit lodged with the People's Bank of China by a financial institution at a given ratio to the foreign exchange deposits taken by such financial institution. "Ratio of foreign exchange reserve deposit" refers to the ratio between the foreign exchange reserve deposit lodged with the People's Bank of China by a financial institution and the foreign exchange deposits taken by such financial institution (Article 3).

Main contents: The Provisions specify the scope of foreign exchange deposits requiring foreign exchange reserve deposits by a financial institution: 1) personal foreign exchange savings deposits, institutional foreign exchange deposits, reserve deposits for issue of foreign currency credit cards, and other foreign exchange deposits and liabilities as certified by the People's Bank of China; and 2) the balance on the credit column as a result of the difference between the liability items and asset items of the foreign exchange business entrusted to or the foreign exchange agency business of a financial institution (Article 6). A financial institution is required to transfer the reserve deposit to the account designated by the People's Bank of China before the 15th day of every month (Article 11). The ratio of foreign exchange reserve deposit for all financial institutions is adjusted to the uniform rate of 3% starting from January 15 2005. If a financial institution is to apply to use its foreign exchange reserve deposit due to serious payment difficulty, it should report to the People's Bank of China or its authorized branch or sub-branch for approval (Article 16).
Related legislation: PRC People's Bank of China Law (Revised), Dec 27 2003, CLP2004 No.1 p4 and PRC Commercial Banking Law (Revised), Dec 27 2003, CLP2004 No.1 p4
Repealed legislation: Administration of Payment of Deposit Reserves by Foreign Investment Financial Institutions Procedures, Apr 30 1996 and Administration of Foreign Exchange Reserve Deposits Provisions, Dec 1 1996