State Administration of Foreign Exchange, Circular on Issues Relevant to Further Strengthening the Administration of Foreign Exchange Transactions

Issued: March 18 2011
Effective: April 1 2011

Main contents: In regards to banks that have launched forward settlement and sale of foreign exchange business whose balance of cash basis position is negative, the lower limit of their foreign exchange position shall be suppressed (Article 1). Banks that receive foreign exchange income relating to entrepôt trade shall transfer the amount to the enterprise's account for further verification, and may handle foreign exchange settlement and transfer procedures for the enterprise only after verifying the documents for payment to overseas parties (Article 2). The fundamental ratio of the advance payment received from trade in goods and of the deferred payment for 90 days or more shall be respectively reduced to 20% of the total foreign exchange receipts from exports and 20% of the total foreign exchange payment for imports in the preceding 12 months (Article 3). The short-term foreign debt quotas for domestic institutions for the year 2011 shall be further suppressed, and the short-term foreign debt quotas shall be appropriately reduced for banks whose inter-bank placement with and lending to other banks are of a relatively large scale (Article 4).