People's Bank of China, Circular on Simplifying the Procedure for Cross-border Renminbi Transactions and Improving Relevant Policies

(2) If the funds of an enterprise for renminbi settlement on the current account need to be automatically credited to its account, the domestic bank may do the crediting for it first, then carry out the relevant review of the genuineness of the transaction.

(3) Domestic banks are encouraged to engage in the cross-border renminbi trade financing business. Domestic banks may engage in cross-border asset transfers in connection with cross-border renminbi trade financing (Article 1).

2. Cross-border renminbi lending by domestic organisations other than financial institutions

(1) A domestic organisation other than a financial institution (Domestic Organisation) may apply to a domestic bank for settlement in connection with a loan extended abroad in renminbi. A Domestic Organisation that has an equity relationship with an offshore enterprise or is controlled together therewith by a parent company and a member organisation exercises regional headquarters or investment management functions may use a renminbi fund pool model to apply to a domestic bank for settlement in connection with loans extended abroad from a renminbi fund pool.

(2) Once the domestic bank has carefully reviewed the offshore renminbi loan application materials submitted by the Domestic Organisation, it shall carry out cross-border renminbi settlement for it.

(3) The interest rate on, term of, and purpose of, a loan extended abroad by a Domestic Organisation shall, within a reasonable scope, be determined by the parties through consultations based on commercial principles.

(4) A loan extended abroad in renminbi must be recovered in renminbi in the dedicated renminbi deposit account from which the loan was made, and the amount returning thereto may not exceed the total of the loan principal and interest, domestic income tax, related charges and other such reasonable revenue (Article 3).

3 Offering of renminbi-denominated bonds offshore by domestic organisations

(1) A Domestic Organisation may apply to a domestic bank to open a dedicated renminbi deposit account in accordance with regulations for the administration of bank settlement accounts such as the Measures for the Administration of Renminbi Bank Settlement Accounts to be used exclusively to deposit bond offering proceeds, the remittance from abroad of which has been approved by the People's Bank of China (Article 4).

Related legislation: Measures for the Administration of Renminbi Bank Settlement Accounts, Apr 10 2003, CLP 2003 No.4 p.5