Detailed Rules for the Implementation of the Regulations of the People’s Republic of China on the Administration of Foreign-invested Banks (5)
Source: CBRC View: 385 Date: 2011-05-16

Chapter III Business Scope

Article 47 The phrase "purchasing/sell government bonds, financial bonds and other foreign currency negotiable securities other than stocks" as mentioned in Article 29 (4) and Article 31 (4) of the Regulations includes but is not limited to the following foreign exchange investment businesses, i.e. the Chinese and foreign government bonds, Chinese financial institution bonds and Chinese non-financial institution bonds which are issued outside the territory of China.

Article 48 The phrase "services of credit rating and consulting" as mentioned in Article 29 (12) and Article 31 (11) of the Regulations refers to the credit standing investigations and consultation services in relation to the banking businesses.

Article 49 Any branch of a foreign bank shall have the operating capital which is not less than 200 million Yuan or the equivalent value in a freely convertible currency when it plans to engage in the foreign exchange businesses as prescribed in Article 31 of the Regulations.

Article 50 Any branch of a foreign bank shall have an operating capital which is not less than 300 million Yuan or the equivalent value in a freely convertible currency, of which the Renminbi operating capital shall not be less than 100 million Yuan when it plans to engage in the foreign exchange businesses and Renminbi business.

Article 51 A solely foreign-invested bank, which is transformed from a branch of a foreign bank and which is solely invested by its headquarters, may inherit all businesses in which the original branch of the foreign bank is approved to engage.

Article 52 A solely foreign-invested bank or Chinese-foreign equity joint bank may authorize its branch institution(s) to implement businesses within its approved business scope.
Any branch of a foreign bank may authorize its inner-city sub-branches to implement businesses within the approved business scope.

Article 53 Article 34 of the Regulations prescribes the conditions which a business institution of a foreign-invested bank initially applies for engaging in Renminbi businesses shall satisfy, among which Items (1) and (2) mean that 3 years or more have lapsed since the operation start of the business institution of the foreign-invested bank and it has a favorable balance for 2 consecutive years before filing the application. The phrase "having practiced… for 3 years…" refers to 3 full years from the day when an approval of operation start is obtained by the business institution of the foreign-invested bank to the date of application. The phrase "having made profits for 2 successive years before filing the application" refers to the fact that the audited financial statements of business institution of the foreign-invested bank of the previous before 2 fiscal years as at the date of application show favorable balances.
A business institution of a foreign-invested bank which has acquired an approval to engage in Renminbi business shall meet the prudent conditions as described by the CBRC when it applies for expanding its service scope of Renminbi business, and the examination and approval of the CBRC shall be subject to.

Article 54 A solely foreign-invested bank or Chinese-foreign equity joint bank may not only meet the prudent conditions as described by the CBRC in order to engage in Renminbi businesses aiming at citizens within China, but also have business networks which accord with its business features and development needs.

Article 55 It shall submit the following application materials (in duplicate) to the local banking regulatory bureau when any business institution of a foreign-invested bank applies for engaging in Renminbi businesses or expanding the scope of service objects of Renminbi businesses, and a copy shall be sent to the local institution dispatched by the CBRC simultaneously:
(1) An application signed by the chairman of the board of directors or president (chief executive officer or general manager) of the applicant and addressed to the Chairman of the CBRC;
(2) A feasibility study report;
(3) The internal control system and operating procedures for the businesses to be engaged in;
(4) The audited balance sheets and income statements of the previous 2 fiscal years as at the date of application; and
(5) Other materials as requested by the CBRC.
The local banking regulatory bureau shall submit to the CBRC the application materials along with its examination opinions within 20 days after it receives a complete set of the application materials.
The CBRC shall make a decision of approval or disapproval of the applicant’s engaging in Renminbi businesses or expanding the scope of service objects of Renminbi businesses within 3 months after it receives a complete set of the application materials, and present a written notice to the applicant. It shall make an explanation if it makes a decision of disapproval.

Article 56 The business institution of the foreign-invested bank shall finish the preparatory tasks within 4 months after it obtains the CBRC’s approval of its engaging in Renminbi businesses or expanding the scope of service objects of Renminbi businesses:
(1) Hiring an appropriate number of business personnel that can satisfy the demands of its business development;
(2) Printing the important business vouchers and documents for external use and to submit relevant specimens to the local institution dispatched by the CBRC;
(3) To be equipped with safety protection facilities accredited by the relevant department and submit photocopies of the pertinent certifications to the local institution dispatched by the CBRC;
(4) To establish a sound internal control system and operating procedures for Renminbi businesses and send them to the local institution dispatched by the CBRC; and
(5) It shall hire an accounting firm lawfully established within China to verify its capital and submit the capital verification certification to the local institution dispatched by the CBRC if it needs to improve the registered capital or operating capital.
The original approval of the CBRC shall be invalidated automatically if the business institution of the foreign-invested bank cannot finish the preparatory tasks within 4 months.

Article 57 The business institution of a foreign-invested bank shall apply to the local institution dispatched by the CBRC for a check after it finishes the preparatory tasks, and the local institution dispatched by the CBRC shall do so within 10 days. The local institution dispatched by the CBRC shall issue to the applicant a document of opinions on passing the check if it passes the check. The applicant may apply to the local institution dispatched by the CBRC for a recheck within 10 days after it receives a notice that it cannot pass the check.
, The business institution of the foreign-invested bank shall fetch an approval from the CBRC upon the strength of the document of opinions on passing the check.

Article 58 Any branch of a solely foreign-invested bank or branch of a Chinese-foreign equity joint bank shall engage in Renminbi businesses within the scope of the business scope of and under the authorization of its headquarters. It shall, before carrying out such businesses, finish the preparatory tasks in accordance with Article 56 of the present Detailed Rules and submit the authorization of its headquarters to the local institution dispatched by the CBRC.
The branch of the solely foreign-invested bank or branch of the Chinese-foreign equity joint bank shall apply to the local institution dispatched by the CBRC for a check after it finishes the preparatory work. After it receive the check materials, the local institution dispatched by the CBRC shall do so within 10 days. The local institution dispatched by the CBRC shall issue to it a document of opinions on passing the check if the applicant passes the check. It may apply to the local institution dispatched by the CBRC for a recheck within 10 days after it receives a notice that it fails to pass the check.
Upon the strength of the document of opinions on passing the check, the branch of the solely foreign-invested bank or branch of the Chinese-foreign equity joint bank shall fetch from the CBRC a confirmation letter for engaging in Renminbi business and go through the procedures for modifying the business license in the administrative department for industry and commerce.

Article 59 Any business institution or branch institution of a foreign-invested bank shall make an announcement on a national newspaper as designated by the CBRC and on a local newspaper as designated by the local institution dispatched by the CBRC when it engages in Renminbi businesses or expands its scope of objects of Renminbi businesses.

Article 60 Any business institution of a foreign-invested bank shall submit the application materials (in duplicate) to the banking regulatory bureau of the place where the solely foreign-invested bank, headquarters of the Chinese-foreign equity joint bank, or the management bank of foreign bank is located when it plans to engage in the businesses as mentioned in Article 29 (13) or in Article 31 (12), and a copy shall be simultaneously sent to the institution dispatched by the CBRC to the place where the business institution of the foreign-invested bank is located:
(1) An application signed by the person authorized by the applicant and addressed to the Chairman of the CBRC.
(2) A detailed description of the businesses to be engaged in, the internal control system and the operating procedures; and
(3) Other materials as requested by the CBRC.
The local banking regulatory bureau shall, submit to the CBRC the application materials along with its examination opinions within 20 days after it receives a complete set of the application materials.
The CBRC shall, make a decision of approval or disapproval and present a written notice to the applicant within 3 months after it receives a complete set of the application materials. It shall make an explanation if it makes a decision of disapproval.

Article 61 Any business institution or branch institution of a foreign-invested bank shall, when it operates any new product within its business scope, submit to the local institution dispatched by the CBRC a written report, which includes an introduction to the new product, features of risks, internal control system and operating procedures within 5 days after it starts such business operations.

Article 62 Any business institution of a foreign-invested bank may engage in the inter-bank Renminbi borrowing business under the relative provisions.
 

Devott Publications
The Selection of the TOP Global Outsourcing Destinations – China TOP 15 (TGOD China TOP 15) Ended and Its Rankings and Research Reports are Now Available Worldwide