Drafts of three major bank laws were put forward for third-round review by China's legislature Monday.
The draft law on banking supervision, the draft amendment of the Law on the People's Bank of China (PBOC), the central bank, and the draft amendment of the Law on Commercial Banks were discussed at the sixth session of the tenth National People's Congress (NPC) Standing Committee, which started Monday.
The draft amendment of Law on the People's Bank of China (PBOC) added an item that the State Council will set up a coordination mechanism for the financial sector.
China's banking, securities and insurance industries are supervised by three watchdogs, the China Banking Regulatory Commission (CBRC), the China Securities Regulatory Commission (CSRC) and the China Insurance Regulatory Commission (CIRC), respectively.
A coordination mechanism will improve supervision upon the financial sector, in which different industries are partially integrated, said Jiang Qiangui, vice-chairwoman of the NPC Law Committee, who reported the result of previous discussions on this topic to the NPC Standing Committee.
A coordination mechanism among the three watchdogs has been strongly recommended by insiders.
The draft amendment to the Law on Commercial Banks also left room for possibility of banks dabbling in non-banking financial businesses, Jiang said.
The present Law on Commercial Banks bans commercial banks from engaging in non-banking businesses such as securities, insurance and trust services.
According to the draft amendment, banks are forbidden to engage in trust and securities businesses, or invest in non-banking financial institutions or enterprises.
The business of commercial banks is expanding and moving on to the integration of banking and non-banking businesses. But so far it is still not time to totally legalize the integration since the supervision mechanism is not yet in place, Jiang said.
(Xinhua News Agency December 23, 2003)
