Administration of Pilot Projects for Securitization of Credit Assets Procedures

Article 2: These Procedures shall govern the structural financing activities wherein a financial institution in the banking industry in China, acting as a sponsor, entrusts credit assets to a trustee, the trustee offers beneficiary securities in the form of asset backed securities to institutional investors and the cash generated by such property is used to pay returns on the asset backed securities.

A trustee shall appoint a loan service institution, fund custodian, securities registration and depository institution and other institutions that provide services for the securitization transaction to respectively perform their relevant duties in accordance with these Procedures and the trust contract.

A trustee shall bear the obligation to pay the returns on the asset backed securities to the institutional investors to the extent of the trust property.

Article 3: Asset backed securities shall be offered by the trustee of a special purpose trust and represent shares in the right to receive trust benefits from the special purpose trust.

Asset backed securities shall be offered and traded on the national inter-bank bond market.

Article 4: The rights and obligations of the credit asset securitization sponsor, trustee, loan service institution, fund custodian, securities registration and depository institution, other institutions that provide services for the securitization transaction and institutions that invest in asset backed securities shall accord with relevant laws, regulations, these Procedures and such contracts as the trust contract, etc. (hereinafter collectively referred to as the Legal Documents).

A trustee shall perform its entrusted duties in accordance with relevant laws, regulations, these Procedures and the Legal Documents. The sponsor, loan service institution, fund custodian, securities registration and depository institution and other institutions that provide services for the securitization transaction shall perform their respective duties in accordance with relevant laws, regulations, these Procedures and the Legal Documents.

Institutions that invest in asset backed securities (also known as holders of asset backed securities) shall enjoy the benefits in the trust property and bear the risks associated therewith in accordance with the Legal Documents and shall make decisions on material matters affecting their interests through the general meeting of the holders of the asset backed securities.

Article 5: When engaging in credit asset securitization activities, the principles of free will, fairness and good faith shall be observed, and such activities may not harm state interests or the public interest.

Article 6: The credit assets obtained by a trustee as a result of its accepting a trust are the trust property and are separate from the assets of the sponsor, trustee, loan service institution, fund custodian, securities registration and depository institution and other institutions that provide services for the securitization transaction.

The property and returns obtained by the trustee, loan service institution, fund custodian and other institutions that provide services for the securitization transaction as a result of their management, application or otherwise of the special purpose trust property shall be part of the trust property.

If the sponsor, trustee, loan service institution, fund custodian, securities registration and depository institution or other institution that provides services for the securitization transaction is liquidated due to its being dissolved in accordance with the law, being closed down in accordance with the law, being declared bankrupt in accordance with the law or other such reason, the trust property shall not be part of its property subject to liquidation.

Article 7: The claims generated by a trustee in managing, applying and disposing of trust property may not be used to offset the liabilities arising from the property of the sponsor, trustee, loan service institution, fund custodian, securities registration and depository institution or other institution that provides services for the securitization transaction. The claims and liabilities arising from the management, application and disposal of different trust property by a trustee may not be used to mutually offset each other.

Article 8: Trustees, loan service institutions, fund custodians, securities registration and depository institutions and other institutions that provide services for securitization transactions shall scrupulously abide by their duties and perform their obligations of good faith and due diligence.

Article 9: The China Banking Regulatory Commission (the CBRC) will oversee the credit asset securitization business activities of relevant institutions in accordance with the law. The relevant oversight provisions will be formulated separately by the CBRC.

Article 10: The People's Bank of China will oversee the offering and trading of asset backed securities on the national inter-bank bond market.

PART TWO: CREDIT ASSET SECURITIZATION SPONSORS AND SPECIAL PURPOSE TRUSTS

Article 11: The term "credit asset securitization sponsor" means a financial institution that transfers credit assets through the establishment of a special purpose trust.

Article 12: A sponsor shall release announcements in national media informing relevant rights holders that it will transfer credit assets through the establishment of a special purpose trust.

Article 13: The sponsor shall execute a trust contract with the trustee, which shall specify the following:

(1) the purpose of the trust;

(2) the names and domiciles of the sponsor and trustee;

(3) the scope of beneficiaries and the method of determining the same;

(4) the scope and type of, standards for, and the state of, the trust property;

(5) the buy back or replacement terms specified in Article 14 hereof;

(6) the form in which and the method whereby the beneficiaries are to receive the benefits from the trust;

(7) the trust term;

(8) the method of managing the trust property;

(9) the rights and obligations of the sponsor and the trustee;

(10) the duties of the institutions that have been appointed by the trustee to handle trust matters on its behalf;

(11) the remuneration of the trustee;

(12) the organizational structure and powers of the general meeting of the holders of the asset backed securities;

(13) the method for selecting a new trustee; and

(14) the grounds for terminating the trust.

Article 14: If, during the term of the trust contract, the trustee discovers that the credit assets serving as the trust property do not comply with the scope, type, standards or state thereof or therefor specified in the trust contract on the deposit commencement date, it shall require the sponsor to buy back or replace the same.

PART THREE: THE TRUSTEE OF A SPECIAL PURPOSE TRUST

Article 15: The trustee of a special purpose trust (the Trustee) is an institution that, because it has accepted a trust, is responsible for managing the property of a special purpose trust and offering asset backed securities.

Article 16: A trust and investment corporation established in accordance with the law or other institution approved by the CBRC shall serve as the Trustee.

Article 17: The Trustee shall perform the following duties in accordance with the trust contract:

(1) offering the asset backed securities;

(2) managing the trust property;

(3) disclosing on an ongoing basis information on the trust property and the asset backed securities;

(4) distributing the trust benefits in accordance with the trust contract; and

(5) performing other duties specified in the trust contract.

Article 18: The Trustee must appoint a commercial bank or other professional institution to serve as the custodian of the trust property and, pursuant to the trust contract, respectively appoint other qualified institutions to perform other trust duties, such as loan servicing, transaction management, etc.

Article 19: The duties of the Trustee shall terminate if:

(1) its qualifications as a Trustee are revoked in accordance with the law;

(2) it is dismissed by the general meeting of the holders of the asset backed securities;

(3) it is dissolved in accordance with the law, is closed down in accordance with the law or is declared bankrupt in accordance with the law;

(4) it resigns; or

(5) another circumstance specified in laws, administrative regulations or the trust contract arises.

Article 20: If the qualifications of the Trustee are revoked in accordance with the law or if it is dissolved in accordance with the law, is closed down in accordance with the law or is declared bankrupt in accordance with the law, the CBRC shall appoint a provisional Trustee until a new one is appointed.

If the duties of the Trustee are terminated, it shall duly preserve the relevant information and timely carry out the handover procedures. The new Trustee or provisional Trustee shall timely accept the handover.

PART FOUR: LOAN SERVICE INSTITUTIONS

Article 21: A loan service institution is an institution that, upon appointment by the Trustee, is responsible for managing the loans.

The loan service institution may be the credit asset securitization sponsor.

Article 22: The Trustee shall execute a service contract with the loan service institution, which shall specify the following:

(1) the names and domiciles of the Trustee and the loan service institution;

(2) the duties of the loan service institution;

(3) the method of, and standards for, managing the loans;

(4) the rights and obligations of the Trustee and the loan service institution;

(5) the remuneration of the loan service institution;

(6) liability for breach of contract; and

(7) other matters.

Article 23: In managing in accordance with the service contract the credit assets that serve as the trust property, the loan service institution shall perform the following duties:

(1) recovering the principal of, and interest on, the loans;

(2) managing the loans;

(3) keeping the legal documents relating to the trust property and keeping them separate from the legal documents relating to its own property;

(4) providing to the Trustee servicing reports periodically on information on the credit assets serving as the trust property; and

(5) performing other duties specified in the service contract.

Article 24: The loan service institution shall have a department dedicated to such business and shall establish independent accounts for the credit assets serving as the trust property and manage them separately.

Article 25: The loan service institution shall transfer the funds recovered from the credit assets serving as the trust property to the fund custodian in accordance with the requirements of the service contract and notify the Trustee thereof.

Article 26: If the Trustee discovers that the loan service institution is unable to perform its duties in accordance with the method and standards set forth in the service contract, it may replace it subject to a decision of the general meeting of the holders of the asset backed securities.

If the Trustee replaces the loan service institution, it shall timely notify the borrowers thereof.

PART FIVE: FUND CUSTODIANS

Article 27: The fund custodian is an institution appointed by the Trustee with responsibility for keeping custody of the funds in the trust property account.

The credit asset securitization sponsor and the loan service institution may not serve as the fund custodian for the same transaction.

Article 28: The Trustee shall execute a fund custody contract with the fund custodian, which shall specify the following:

(1) the names and domiciles of the Trustee and the fund custodian;

(2) the duties of the fund custodian;

(3) the method of, and standards for, managing the funds;

(4) the rights and obligations of the Trustee and the fund custodian;

(5) the remuneration of the fund custodian;

(6) liability for breach of contract; and

(7) other matters.

Article 29: In managing the funds in accordance with the fund custody contract, the fund custodian shall perform the following duties:

(1) safekeeping the funds derived from the trust property;

(2) opening a trust property fund account in the name of the credit asset securitization special purpose trust;

(3) paying the investment returns to the holders of asset backed securities by the method specified in the fund custody contract;

(4) managing the funds in the special purpose trust account by the method specified in the fund custody contract and in accordance with the instructions of the Trustee;

(5) providing fund custody reports to the Trustee periodically in accordance with the fund custody contract, which shall report on its management of the funds and its payment of the returns on the asset backed securities; and

(6) performing other duties specified in the fund custody contract.

Pursuant to the trust contract, the Trustee may also appoint other service institutions to perform the duties specified in Items (3), (4) and (5) above.

Article 30: During the intervals between payment of the returns on the trust property to the institutional investors, the fund custodian may, in accordance with the method specified in the contract and the instructions of the Trustee, only invest the returns on the trust property in highly tradable and liquid sovereign bonds, policy monetary bonds and other financial products the investment in which is permitted by the People's Bank of China.

Article 31: If the Trustee discovers that the fund custodian is unable to keep custody of the funds in accordance with the method and standards set forth in the contract, it may replace it subject to a decision of the general meeting of the holders of the asset backed securities.

PART SIX: OFFERING AND TRADING OF ASSET BACKED SECURITIES

Article 32: When a Trustee proposes to offer asset backed securities on the national inter-bank bond market, it shall submit the following documents to the People's Bank of China:

(1) an application;

(2) a written consent document from the authority specified in the sponsor's articles of association or document in the nature of articles of association;

(3) drafts of the trust contract, loan service contract, fund custody contract and other Legal Documents;

(4) a draft of the prospectus (for the format requirements, see the Appendix);

(5) the underwriting agreement;

(6) the relevant approval documents of the CBRC;

(7) a legal opinion issued by a practising lawyer;

(8) an accounting opinion issued by a registered accountant;

(9) a draft credit rating report issued by a credit rating agency and an explanation of the arrangement for ongoing follow-up ratings; and

(10) other documents that the People's Bank of China specifies be submitted.

Article 33: The People's Bank of China shall render its decision on whether or not to accept the application within five working days of the date of receipt of all the documents for the asset backed securities offer. If it decides not to accept the application, it shall notify the applicant in writing of the reason why it did not accept the application. If it decides to accept the application, it shall render its written decision of approval or non-approval within 20 working days of the date of acceptance of the application.

Article 34: The credit rating of asset backed securities may be raised through an internal or external credit rating increase.

Article 35: When asset backed securities are to be offered and traded on the national inter-bank bond market, a credit rating agency with rating qualifications shall be engaged to conduct credit ratings of the asset backed securities on an ongoing basis.

A credit rating agency shall ensure that its credit ratings are objective and impartial.

Article 36: When offering asset backed securities, the issuer shall organize an underwriting consortium. During the offer period, the underwriter may distribute the asset backed securities it has underwritten to other investors.

Article 37: The name of the asset backed securities shall be conspicuously different from the names of the sponsor, Trustee, loan service institution and fund custodian.

Article 38: Asset backed securities may be offered either in a one-off offering or in instalments. If asset backed securities are offered in instalments, the Trustee shall submit the final prospectus, rating report and all the final Legal Documents to the People's Bank of China for the record five working days prior to each offer instalment, and, as required by the People's Bank of China, disclose relevant information.

Article 39: Underwriters of asset backed securities may be selected either by way of agreement or through an invitation for bids. An underwriter shall be a financial institution that satisfies the following conditions:

(1) having registered capital of not less than Rmb200 million;

(2) having relatively strong bond distribution capabilities;

(3) having qualified professionals engaging in bond market business and bond distribution channels;

(4) not having committed any major violations of laws or regulations in the most recent two years; and

(5) satisfying other conditions required by the People's Bank of China.

Article 40: Within 10 working days of the completion of an offering of asset backed securities on the national inter-bank bond market, the Trustee shall report on the offering of the asset backed securities to the People's Bank of China and the CBRC.

Article 41: Asset backed securities may be privately placed with particular investors, in which case a credit rating shall not be required. Asset backed securities offered in a private placement may only be transferred between subscribers to the private placement.

Article 42: Two months after the conclusion of an offering of asset backed securities on the national inter-bank bond market, the Trustee may apply in accordance with the Verification of the Trading and Circulation of Bonds in the National Inter-bank Bond Market Rules for the trading of the asset backed securities on the national inter-bank bond market.

Article 43: The registration, deposit, trading and clearing of asset backed securities traded on the national inter-bank bond market shall be handled in accordance with such provisions as the Administration of Bond Transactions in the National Inter-bank Bond Market Procedures, etc.

PART SEVEN: INFORMATION DISCLOSURE

Article 44: Prior to the offering of asset backed securities and during their lifespan, the Trustee shall disclose information on the trust property and the asset backed securities in accordance with the law. Information disclosures shall be effected through mass media designated by the People's Bank of China.

The Trustee and persons in the know may not divulge information before such information is disclosed.

Article 45: The Trustee shall ensure that the information disclosed is true, accurate, complete and timely and does not contain any false or misleading statements or material omissions.

The institutions appointed by the Trustee to provide services for the securitization transaction shall provide relevant information reports to the Trustee in accordance with the Legal Documents and ensure that the information that they provide is true, accurate, complete and timely.

Article 46: The Trustee shall issue the final prospectus five working days prior to the offering of the asset backed securities.

Article 47: In a conspicuous location in the prospectus, the Trustee shall remind the institutional investors that the asset backed securities only represent corresponding shares of the right to benefits from the special purpose trust, are not the liabilities of the credit asset securitization sponsor, the special purpose trust Trustee or any other institution and that the right of recourse of the institutional investors is limited to the trust property.

Article 48: During the lifespan of the asset backed securities, the Trustee shall check the loan servicing reports and fund custody reports submitted periodically by the loan service institution and fund custodian respectively and issue its own disclosure reports periodically that shall report information on the trust property, repayments of the principal of, and payments of the interest on, the loans, earnings on the securities and other information specified by the People's Bank of China and the CBRC.

Article 49: The Trustee shall timely disclose all information that has a substantive effect on the investment value of the asset backed securities.

Article 50: The annual reports of the Trustee shall be audited by a certified public accountant and the audit reports shall be disclosed by the Trustee.

Article 51: Prior to an information disclosure, the Trustee shall submit the relevant information disclosure documents to the National Inter-bank Funding Center and China Government Securities Depository Trust & Clearing Company.

The National Inter-bank Funding Center and China Government Securities Depository Trust & Clearing Company shall provide services for the disclosure of asset backed securities information and timely report violations of information disclosure provisions to the People's Bank of China and announce the same.

PART EIGHT: RIGHTS OF HOLDERS OF ASSET BACKED SECURITIES AND THE EXERCISE THEREOF

Article 52: Pursuant to the Legal Documents, a holder of asset backed securities enjoys the following rights:

(1) receiving a share of the trust benefits;

(2) receiving a share of the remaining trust property after liquidation;

(3) transferring its asset backed securities in accordance with the law;

(4) requesting the convening of a general meeting of the holders of the asset backed securities in accordance with provisions;

(5) exercising its voting rights in respect of matters deliberated at general meetings of the holders of the asset backed securities;

(6) reviewing or reproducing publicly disclosed information on the trust property and asset backed securities; and

(7) other rights specified in the trust contract and prospectus.

Article 53: The following matters shall require deliberation and a decision reached at a general meeting of the holders of the asset backed securities, unless the trust contract has express provisions thereon, in which case such provisions shall prevail:

(1) replacement of the special purpose trust Trustee; and

(2) other matters specified in the trust contract.

Article 54: General meetings of the holders of the asset backed securities shall be convened by the Trustee. If the Trustee fails to convene a meeting, the holders of the asset backed securities shall have the right to convene a meeting themselves in accordance with the trust contract and shall report the same to the People's Bank of China for the record.

Article 55: To hold a general meeting of the holders of the asset backed securities, the convener shall announce the time and place of, and method of holding, the meeting, the matters to be deliberated, the agenda, the voting method, etc. at least 30 days in advance.

Votes may not be taken on matters not appearing on the announcement for the general meeting of the holders of the asset backed securities.

Article 56: A general meeting of the holders of the asset backed securities may be held in person or via communication devices or other methods.

Holders of asset backed securities shall enjoy voting rights in accordance with the trust contract. A holder of asset backed securities may appoint a proxy to attend a general meeting of the holders of the asset backed securities and vote on his or her behalf.

Article 57: Matters decided at a general meeting of the holders of the asset backed securities shall be reported to the People's Bank of China for the record and announced.

PART NINE: SUPPLEMENTARY PROVISIONS

Article 58: Provisions on accounting and tax treatment relating to credit asset securitization and on the registration of real property mortgages and the amendment thereof shall be formulated separately by the relevant State Council departments.

Article 59: Policies on investment management relating to the purchase and holding of asset backed securities shall be formulated separately by the relevant regulatory authorities.

Article 60: These Procedures shall be implemented as of the date of issuance.

Article 61: The People's Bank of China and the CBRC are in charge of interpreting these Procedures.

Appendix

Requirements in Respect of the Preparation of the Prospectus for an Offering of Asset Backed Securities

1. The names and domiciles of the issuer (trustee), sponsor, loan service institution, fund custodian, securities registration and depository institution and other institutions that are to provide services for the securitization transaction.

2. A brief description of the sponsor and an overview of its financial position.

3. A statement on the experience and records of breach of contract of the sponsor, trustee, loan service institution and fund custodian in previous securitization transactions.

4. The structure of the transaction and the principal rights and obligations of the concerned parties.

5. The organizational form and powers of the general meeting of the holders of the asset backed securities.

6. A statement of the connections among the parties to the transaction.

7. The main provisions of such Legal Documents as the trust contract, loan service contract and fund custody contract.

8. The loan disbursement procedure, verification standards, form of guarantee, management method and the procedure and method of handling breach of the loan contract.

9. The criteria for selecting the credit assets for the establishment of the special purpose trust and statistical information on such assets.

10. A list of the taxes and fees that need to be paid in connection with the cash flow from the trust property, the source of the funds for the payment of such taxes and fees and the order of priority in payment.

11. The brackets of the offered asset backed securities, the amount of the capital in each bracket, their credit rating, face rate of interest, forecast term and the order of priority in discharging the principal and interest.

12. The internal and external methods of raising the creditworthiness of the asset backed securities.

13. An overview of the credit rating report for the asset backed securities issued by the credit rating agency and an explanation of the arrangement for ongoing follow-up ratings.

14. An overview of the legal opinion issued by the practising lawyer.

15. The optional or mandatory buy back or termination provisions, e.g. clearance buy back terms.

16. An analysis of the interest rate sensitivity of each bracket of asset backed securities under the given prepayment rate, the return rate on each bracket of asset backed securities and the changes in their average weighted maturity.

17. An investment risk warning.

18. An opinion on the tax arrangements for the transaction issued by a certified public accountant.

19. The information to be disclosed during the lifespan of the securities and the method of obtaining the same.

20. Other matters that the People's Bank of China specifies be included.