Regulating the Trans-Provincial Draft Business of Banking Financial Institutions
· Document Number：No. 21  of General Office of the China Banking and Insurance Regulatory Commission
· Area of Law： Banking & Finance Negotiable Instruments
· Level of Authority： Departmental Regulatory Documents
· Date issued：05-02-2018
· Effective Date：05-02-2018
· Issuing Authority： All Commissions
· Status： Effective
Notice of the General Office of the China Banking and Insurance Regulatory Commission on Regulating the Trans-Provincial Draft Business of Banking Financial Institutions
(No. 21  of the General Office of the China Banking and Insurance Regulatory Commission)
All local offices of the former China Banking Regulatory Commission (“CBRC”); all large-scale banks and joint-stock banks; Postal Savings Bank of China; and foreign-funded banks:
For the purposes of further regulating the draft business of banking financial institutions, effectively preventing risks, and enhancing the quality of serving the real economy, you are hereby notified of the following matters on the trans-provincial draft business:
I. For the purposes of this Notice, trans-provincial draft business means the draft acceptance, discount and other credit granting business handed by banking financial institutions and their branch offices for enterprises registered in regions other than the provinces (autonomous regions and municipalities directly under the Central Government) where they are located, as well as the draft rediscount, reverse repurchase (repurchase) and other transaction business carried out with transaction entities whose business premises are located in regions other than the provinces (autonomous regions and municipalities directly under the Central Government) where they are located.
II. Banking financial institutions shall strictly implement the requirements of the Notice on Strengthening the Supervision and Administration of Draft Business and Promoting the Sound Development of the Draft Market (No. 126 , CBRC), the Notice on the Risk Warning of the Draft Business (No. 203 , General Office of the CBRC) and the Notice on Regulating the Interbank Business of Financial Institutions (No. 127 , CBRC), among others, and strengthen the risk control for credit granting management of draft acceptance and discount, management of counterparties for draft rediscount, reverse repurchase (repurchase) and other transaction business, management of interbank clearing accounts and other important links. They shall continue to strengthen the management of employees' behaviors, and strictly prohibited employees from participating in various types of draft intermediary and fund broker activities. They shall make efforts to foster the culture of conducting business operation in accordance with laws and regulations, raise the compliance awareness of the management and employees, and establish the concept of prudent business operation.
III. Banking financial institutions shall access to the electronic commercial draft system of the People's Bank of China and the Commercial Paper Exchange System of China of Shanghai Commercial Paper Exchange Corporation Ltd as soon as possible, and continuously increase the proportion of electronic draft in rediscount, reverse repurchase (repurchase) and other draft transaction business. Banking financial institutions shall carry out electronic rediscount and reverse repurchase (repurchase) transactions of trans-provincial electronic drafts and paper drafts through the electronic commercial draft system, the Commercial Paper Exchange System of China, and other infrastructures on the draft market.
Banking financial institutions that have carried out trans-provincial paper draft rediscount and reverse repurchase (repurchase) business prior to the issuance of this Notice may, within six months of the date of the issuance of this Notice, continue to carry out relevant business, but shall gradually reduce the business scale; and shall cease the relevant business and terminate the existing business upon expiry of the contract six months after the issuance of this Notice.
IV. Banking financial institutions shall prudently carry out trans-provincial draft acceptance and discount business. The scale and development speed of business development shall be compatible with the trans-provincial credit granting management capabilities. Banking financial institutions that intend to or have carried out relevant business shall develop internal management rules on granting of credit to non-local clients including draft acceptance, discount and other credit granting methods; shall implement strict authorization management, and the legal person headquarters of the banking financial institutions shall, in accordance with the relevant business management regulations of these institutions, risk management and control capabilities of branch offices, regional economic development status, and target clients' categories, among others, grant differentiated authorization; and shall establish coordination and control mechanisms among branch offices to avoid internal competition, and where branch offices are established in the places where clients are located, local branch offices shall handle draft acceptance and discount in principle, except the aforesaid business relevant to the supply chain carried out according to the Guiding Opinions of the General Office of the State Council on Vigorously Advancing the Innovation on and Application of Supply Chains (No. 84 , General Office of the State Council).
V. The supervision and administration departments at all levels shall closely monitor the trans-provincial draft business of banking financial institutions and shall indicate risks in a timely manner upon discovery of large transactions and abnormal fluctuations; and intensify the on-site inspection of trans-provincial draft business of banking financial institutions. For the problems of various types of draft business such as illegal business handling, inappropriate transaction and arbitrage found in routine supervision and examination, banking financial institutions shall be urged to diligently make rectification, seriously conduct accountability, improve internal control, and close loopholes. Those who seriously violate the laws and regulations shall be strictly and severely punished according to the law.
May 2, 2018