- Banking and Finance Laws
- China Law News
- Corporate Governance
- Foreign Direct Investment
- Retail Trade and Distribution
New terms for renminbi business by foreign banks
September 01, 2006 | BY
clpstaffThe China Banking Regulatory Commission (CBRC) has circulated a draft notice detailing the requirements for foreign banks to conduct retail business in…
The China Banking Regulatory Commission (CBRC) has circulated a draft notice detailing the requirements for foreign banks to conduct retail business in the renminbi. The new rules form part of China's pledge to fully open the local currency market to foreign competition, pursuant to its agreement with the World Trade Organization.
Under the requirements, foreign banks may be required to incorporate their local operations in China as PRC-registered companies and capitalize their entities with at least Rmb1 billion (US$125 million), The Wall Street Journal reports.
Currently, foreign banks manage their PRC branches from their overseas headquarters, can handle loans and deposits in foreign currencies and can only provide renminbi-denominated services to enterprises.
The rules are intended to put foreign and local banks on an equal footing, as the new requirements are the same as those currently provided for domestic banks. However, no final decisions have been made on the regulations, and many bankers are concerned that the regulatory authorities may create new tax and legal implications that could lead to increases in costs for foreign banks. The CBRC held meetings with banks on August 22-23 2006 to discuss the rules.
This premium content is reserved for
China Law & Practice Subscribers.
A Premium Subscription Provides:
- A database of over 3,000 essential documents including key PRC legislation translated into English
- A choice of newsletters to alert you to changes affecting your business including sector specific updates
- Premium access to the mobile optimized site for timely analysis that guides you through China's ever-changing business environment
Already a subscriber? Log In Now