Rule drafted for foreign lenders
By Zhang Ran (China Daily)
Updated: 2006-06-21 08:45
China's banking regulator is likely to complete a revised administrative rule
soon that would allow foreign banks to deal with renminbi retail business across
the country.
The draft rule would need further approval from the State
Council, a source, who declined to be named, said yesterday.
Foreign
banks would be encouraged to register corporations in China instead of setting
up branches to deal with renminbi business in order to protect the interests of
domestic depositors, according to the revised rule. The minimum registered
capital of a foreign banking corporation is said to be around US$125
million.
"The new rule will allow foreign banks to choose a diversified
presence in the country, and a foreign banking corporation registered with local
administration will enjoy much more favourable treatment than a foreign bank
branch," the source said.
The rule is likely to restrict US$125,000 as a
minimum amount for foreign bank branches wanting to collect deposits from local
residents' accounts, while a foreign banking corporation is not likely to face
restrictions and would be able to deal in all types of renminbi business under
the new rule.
Since foreign banks will be able to deal in renminbi with
local residents by the end of 2006, it is important foreign banks are registered
locally to protect the interests of domestic depositors and maintain the
security of the country's financial system, said an analyst, who declined to be
named. This practice is more in line with the global norm and more accessible
for local supervision, he added.
Foreign banks, which currently deal with
renminbi business in 25 cities, will be allowed to expand across the country and
extend their clients from enterprises to local residents at the end of 2006
under the revised draft rule.
The revision is part of China's push to
realize its World Trade Organization commitment in banking, which is scheduled
to open up completely to foreign capital at the end of this year.
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