Qualified domestic institutional investors, or QDIIs, from China's banking sector, had acquired 13 billion yuan (US$ 1.7 billion) in investment quotas by the end of June, sources with the China Banking Regulatory Commission said on Wednesday.

The amount accounted for 26 percent of the total quota of 50 billion yuan, the sources added.

By the end of June, 22 Chinese and foreign banks had been approved as QDIIs, of which 19 obtained quotas for offshore investment of 10.5 billion yuan and US$ 336 million worth of foreign currencies.

The QDII system was initiated by the Hong Kong government and was designed to allow investors from the Chinese mainland to invest abroad despite the inconvertibility of Renminbi in capital accounts. In April 2006, regulations on commercial banks' offshore wealth management were promulgated. Five months later, the first QDII product tailored to individuals was put on the market.

Industry analysts said given the expectations for further appreciation of the yuan, domestic institutional and individual investors were more willing to hold Renminbi and invest in yuan-denominated wealth management products. The reluctance to buy QDII products led to the small proportion of the used investment quota.

Securities firms and insurance companies are also allowed to become QDIIs.

(Xinhua News Agency July 25 2007)