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The State Administration of Foreign Exchange (SAFE) on Thursday issued new foreign exchange bankcard regulations in a bid to enhance supervision of business.
Market changes mean that the new rule, which will take effect on September 1, will see some adjustments being made to previous policies on forex-denominated cards.
More curbs are being placed on overseas transactions using domestically issued cards, while regulators are also loosening controls on the use of overseas bank cards on the mainland.
For example, those holding cards issued by overseas institutions will be able to draw cash in foreign currencies from designated banks. It was previously impossible to use such foreign cards to withdraw forex cash on the mainland.
A SAFE spokesman said that this move will better satisfy cardholders' actual demand.
But the major principles on the supervision on foreign currency cards, as established in existing regulations, will not be altered. According to such principles, foreign currencies are still prohibited to be used for circulation in China and only current account transactions can enjoy full convertibility.
Regulators also decided to set a cap of US$10,000 on the maximum amount of cash that can be drawn from domestically issued foreign exchange cards in six consecutive months, in a bid to more closely monitor the use of domestic bankcards overseas.
Restrictions will also be placed on the use of domestically issued cards for trade deals and some specialized non-trade services. Use of such cards is prohibited in gambling, cross-bank transactions and transactions under the capital account.
The SAFE spokesman said that the authorities are generally very supportive of the development of domestic bankcard business, given the convenience brought about by cards and their role in curbing illegal transactions.
A crucial aspect of the regulator's work is to establish more standards to better regulate the business.
In the new rule, SAFE also has more detailed regulations on the procedure for the forex and renminbi purchase and remittance by foreign currency cardholders and relevant repayment procedures.
Although China's bankcard business is still rather undeveloped compared with developing markets, it has been expanding rapidly over the past decade.
Foreign currency cards have also become increasingly popular among Chinese people in recent years as more travel overseas.
By the end of 2003, 10 Chinese banks had issued 2.6 million foreign currency cards, more than triple the figure in 2003, according to SAFE statistics. Recorded overseas transactions (including cash-drawing and consumption) via these cards totaled US$966 million last year, a 47 percent rise from the period between January and November 2002.
Foreign banks are still prohibited from issuing their own cards on the mainland, although some are getting around this by setting up local partnerships.
Local banks are trying to improve their expertise and offer more specialized services for card customers in a bid to face up to these increasing challenges.
Shenzhen-based China Merchants Bank yesterday issued China's first debit card that can be use for both domestic personal banking services and overseas drawing and consumption. The card, named the All-In-One Gold Card, offers comprehensive services ranging from personal banking, securities and foreign exchange trading transactions to overseas use and cash withdrawal.
(China Daily July 16, 2004)
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