The new Rules on the Regulation of Foreign-Funded Financial Institutions that were published on Sunday have incorporated China's commitments to the World Trade Organization, the People's Bank of China spokesman said.
The new regulations, published by the State Council, will come into effect on February 1, 2002. The old rules with the same title, promulgated in 1994, will become history on the same day.
The new regulations will require foreign-funded banks and finance companies to meet the internationally accepted capital adequacy ratio of 8 percent.
Overseas financial institutions applying to operate in China will need to submit a reference from the financial authorities of their home country.
These two provisions are both absent in the old set of rules.
The new rules will govern foreign financial institutions' operations of both foreign and local currencies. Previously, there was an additional regulation on their renminbi business because the service was conducted on a trial basis.
But the central bank's spokesman said that, as China has promised to officially open the local currency business gradually to all foreign banks within five years, the regulations should put business involving foreign and local currencies under one umbrella.
The new rules will also unify the application procedures for domestic and foreign banks planning to set up new operational establishments. Under the current rules, the procedures for foreign and domestic applicants are different.
(China Daily December 31, 2001)
