Since Oct. 1, domestic insurance companies will be allowed to make inter-bank loans of foreign exchanges, according to the State Administration of Foreign Exchange.

The administration noted that the measure will help increase liquidity of foreign capital owned by insurance firms.

According to new rules, domestic insurance companies have to sign an agreement with the China Foreign Exchange Transaction Center and do forex inter-bank lending business within the China Interbank Trade System. They are not allowed to do business with overseas organizations, said the administration.

The rules also stipulate that the longest forex inter-bank borrowing and lending business term will be four months. Total transaction volume will have to be equal or less than half of the company's total foreign capital. For each transaction, the borrowing fund cannot be higher than 10 percent of the company's total and the lending fund cannot be higher than 15 percent.

(Xinhua News Agency October 2, 2003)