Providing Support for China (Guangdong) Pilot Free Trade Zone to Expand the Cross-Border Use of RMB

 2018-06-13  22


Notice of the Guangdong Branch of the People's Bank of China on Providing Support for China (Guangdong) Pilot Free Trade Zone to Expand the Cross-Border Use of RMB


· Document Number:No. 13 [2016] of the Guangdong Branch of the People’s Bank of China

· Area of Law: China (Guangdong) Pilot Free Trade Zone Banking & Finance

· Level of Authority: Local Regulatory Documents

· Date issued:04-13-2016

· Effective Date:04-13-2016

· Status: Effective

· Issuing Authority: Other Institutions of Guangzhou City

 

Notice of the Guangdong Branch of the People's Bank of China on Providing Support for China (Guangdong) Pilot Free Trade Zone to Expand the Cross-Border Use of RMB
(No. 13 [2016] of the Guangdong Branch of the People's Bank of China)
Central sub-branches and branches directly under the People's Bank of China (“PBC”) in all prefectures and cities of Guangdong province; China Guangfa Bank; Guangdong Rural Credit Union; Guangdong Branch of China Development Bank; all policy banks, state-owned commercial banks, Postal Savings Bank of China, joint-stock commercial banks, urban commercial banks and Guangzhou Rural Commercial Bank in Guangzhou; all foreign-funded banks in Guangzhou; and all non-banking financial institutions in Guangdong:
In accordance with the Opinions of the People's Bank of China on Providing Financial Support for the Construction of China (Guangdong) Pilot Free Trade Zone (No. 374 [2015], PBC) and other relevant provisions, and with the approval of the PBC, the issues on providing support for China (Guangdong) Pilot Free Trade Zone (hereinafter referred to as “GDFTZ”) to expand the cross-border use of RMB are hereby announced as follows:
I. All policies and measures issued by the state to encourage and support the expansion of cross-border use of RMB and promote RMB capital account convertibility shall apply to GDFTZ.
II. Settlement banks in Guangdong may, in accordance with the Measures for the Administration of RMB Bank Settlement Accounts (Order No. 5 [2003], PBC), the Measures for the Administration of RMB Bank Settlement Accounts of Overseas Institutions (No. 249 [2010], PBC) and other provisions, and under the principle of effective differentiation in account management, open RMB bank settlement accounts for qualified domestic and overseas entities (including individuals) and handle cross-border RMB settlement approved in this Notice.
III. Cross-border RMB business under current accounts and direct investment accounts for individuals in GDFTZ
Settlement banks in Guangdong may, under the principles of “knowing your clients”, “knowing your businesses” and “due diligence,” directly conduct RMB cross-border settlement under current accounts and direct investment accounts for individuals in GDFTZ based on receipt and payment instructions, and when necessary, may require clients to submit relevant business certificates.
For the purpose of this Notice, “individuals in GDFTZ” mean domestic and overseas individuals who work or reside in GDFTZ.
IV. Cross-border two-way RMB capital pool business of multinational enterprise groups in GDFTZ
(1) When a multinational enterprise group selects a member enterprise (including a finance company) which is registered and formed in GDFTZ and actually conducts business operation or makes investment as the lead enterprise to form the cross-border two-way RMB capital pool, a domestic or an overseas member enterprise of the group which participates in fund collection shall meet the following conditions:
(a) The total business income of the domestic member enterprise in the previous year is not less than 500 million yuan.
(b) The total business income of the overseas member enterprise in the previous year is not less than 100 million yuan.
(2) The cross-border two-way RMB capital pool business of multinational enterprise groups in GDFTZ shall be subject to two-way upper limit management.
Upper limit of net inflow (outflow) of cross-border RMB funds = accrued owner's equity in the cash pool × macro-prudential policy coefficient, and the macro-prudential policy coefficient is temporarily determined as one.
(3) Other matters on the cross-border two-way RMB capital pool business of multinational enterprise groups in GDFTZ not specified herein shall be governed by the Notice of the People's Bank of China on Further Facilitating the Cross-Border Two-Way RMB Cash Pool Business of Multinational Enterprise Groups (No. 279 [2015], PBC).
V. Recycling of funds raised from the overseas issuance of RMB bonds by financial institutions and enterprises in GDFTZ
(1) Financial institutions and enterprises in GDFTZ are supported to issue RMB-denominated bonds overseas, and encouraged to use raised funds overseas. If raised funds are recycled in RMB and used in China, the upper limit of recycled RMB funds = total amount of funds raised through the issuance of bonds × macro-prudential policy coefficient, and the macro-prudential policy coefficient is temporarily determined as one.
(2) RMB funds recycled to China shall be used in strict accordance with the use of raised funds specified in the bond prospectus.
(3) Settlement banks in Guangdong shall conduct due diligence of business authenticity when handling cross-border RMB settlement, use and payment for recycled funds.
VI. Where the overseas parent company of an enterprise in GDFTZ issues RMB-denominated bonds in China according to the relevant provisions, and uses raised funds as borrowings to wholly-owned subsidiaries formed by the group in GDFTZ and member enterprises of the group, the funds shall not be included in existing foreign debts for management.
VII. Granting of overseas RMB loans by banks in GDFTZ
The PBC Guangdong Branch encourages and supports banks in GDFTZ to grant RMB loans to overseas institutions and overseas projects under the principles of actual demand and prudence. Banks in GDFTZ that grant overseas RMB loans shall strictly examine the credit status and project background of borrowers, and ensure that the use of funds complies with the relevant requirements.
VIII. Information Submission and Due Diligence
(1) A settlement bank in Guangdong shall, before handling cross-border RMB settlement in GDFTZ, develop operating procedures and internal control rules, and report it to the PBC Guangdong Branch for recordation and implementation.
(2) An enterprise in GDFTZ shall, after the funds raised through the overseas issuance of RMB bonds by enterprises in GDFTZ are recycled to China, undergo recordation at the PBC Guangdong Branch through the settlement bank. A non-banking financial institution in GDFTZ shall, after the funds raised through the overseas issuance of RMB-denominated bonds by enterprises in GDFTZ are recycled to China, undergo recordation at the PBC Guangdong Branch.
(3) A settlement bank in Guangdong shall, in a timely, accurate and complete manner, enter relevant account information, business information and information on cross-border receipts and payments in GDFTZ in the information management system for cross-border RMB receipts and payments.
(4) A settlement bank in Guangdong shall, under the principles of “knowing your clients,” “knowing your businesses” and “due diligence,” effectively examine the authenticity and regulatory compliance of cross-border RMB use in GDFTZ, and effectively perform the obligations of combating money laundering and the financing of terrorism.
IX. Risk Monitoring and Management
(1) With the approval of the PBC Head Office, the PBC Guangdong Branch may make dynamic adjustments to all macro-prudential policy coefficients in this Notice based on the macro economic situation, and the requirements for credit regulation and control, and risk prevention and control, among others.
(2) Cross-border RMB use in GDFTZ shall have true and legal transaction basis, and business cannot be handled by using false contracts or other certificates or by fabricating transactions. Settlement banks shall establish and improve internal control rules, improve authenticity and legality examination mechanisms, and strictly perform the obligation of submitting data and abnormal and suspicious information.
(3) The PBC Guangdong Branch shall conduct off-site monitoring of business operations conducted by settlement banks in Guangdong, improve early warning indicators, and conduct on-site inspection and check according to actual requirements. If it finds that any bank, non-banking financial institution or enterprise violates the relevant provisions, it shall order the violator to make rectification within a time limit and punish the violator according to the relevant provisions.
This Notice shall come into force on the date of issuance.
Guangdong Branch of the People's Bank of China
April 13, 2016