关于改进外汇担保项下人民币贷款管理的通知 Improving the Administration of Renminbi Loans Secured by Foreign Exchange Circular
(Promulgated by People's Bank of China on 6 July 1999, and effective as of 15 July 1999.)
颁布日期：19990715 实施日期：19990715 颁布单位：中国人民银行
To all branches and business management departments of the People's Bank of China, all branches and the Beijing and Chongqing foreign exchange control departments of the State Administration of Foreign Exchange, all wholly State-owned commercial banks and other commercial banks:
Pursuant to the PRC, Commercial Banking Law and the PRC, Administration of Foreign Exchange Control Regulations and in order to strengthen commercial bank risk management and standardize the business where wholly Chinese-owned designated foreign exchange banks extend Renminbi loans secured by foreign exchange, we hereby notify you concerning the following relevant issues:
1. For the purposes of this Circular the term "Renminbi loans secured by foreign exchange" refers to Renminbi loans extended by wholly Chinese-owned designated foreign exchange banks in China (Renminbi Lending Banks) to foreign investment enterprises (including Sino-foreign equity joint ventures, Sino-foreign cooperative joint ventures and wholly foreign-owned enterprises) in China (Borrowers) and secured by credit guarantees (including standby letters of credit) provided by foreign financial institutions or by foreign-funded financial institutions in China (Foreign-funded Banks) or foreign exchange pledges provided by foreign investment enterprises in China.
2. Applications for Renminbi loans secured by foreign exchange may only be made by foreign investment enterprises whose capital was completely paid in on time and has not been reduced or withdrawn. Renminbi Lending Banks are limited to the head offices of wholly Chinese-owned designated foreign exchange banks in China and their authorized branches.
3. Renminbi loans secured by foreign exchange may be used to satisfy fixed asset investment or working capital needs, but may not be used to purchase foreign exchange.
4. The maximum term for a Renminbi loan secured by foreign exchange is five years.
5. The business of extending Renminbi loans secured by guarantees issued by Foreign-Funded Banks shall be handled in the following manner:
(1) The credit guarantee (including a standby letter of credit) issued by a Foreign-funded Bank shall be an unconditional, irrevocable, non-negotiable written guarantee by which the Foreign-funded Bank assumes joint and several liability for the principal of the Borrower's Renminbi debt and the corresponding interest and charges.
(2) Renminbi Lending Banks shall formulate sound credit risk control systems and they shall themselves carry out assessments of the guarantee performance abilities of the Foreign-funded Banks providing the credit guarantees.
(3) When a Foreign-funded Bank which has provided a guarantee performs the same, its payments may only be made in US dollars, euros (or German marks, French francs or Italian lire), Japanese yen, Hong Kong dollars, pounds sterling or Swiss francs. When performing the guarantee the Foreign-funded Bank shall remit the foreign exchange funds into the foreign exchange account designated by the Renminbi Lending Bank, and the Renminbi Lending Bank shall calculate the payable foreign exchange amount on the basis of the outstanding principal, interest and corresponding charges as well as the cash foreign exchange buying rate posted by such a bank on the day the payment is received and directly carry out foreign exchange settlement. Any excess foreign exchange shall be returned to the Foreign-funded Bank and if there is a shortfall the Foreign-funded Bank shall be required to make up the discrepancy.
(4) After the Foreign-funded Bank performs the guarantee, the Borrower shall carry out foreign debt registration procedures with the administration of foreign exchange of the place where it is located on the basis of the Foreign-funded Bank's relevant debt repayment receipts. When the Borrower pays the foreign debt, it shall obtain the approval of the administration of foreign exchange of the place where it is located.
6. Renminbi loans secured by foreign exchange pledges shall be handled in the following manner:
(1) The foreign exchange pledged by the Borrower may come from its capital or a foreign loan and may also come from revenue relating to current account items. When a pledge is made using revenue relating to current account items, the sum of the pledged foreign exchange amount and the balance in the settlement account may not exceed the limit on the settlement account. When a pledge is made using funds from a foreign loan, the maturity date of the Renminbi loan may not be later than the maturity date of the foreign loan.
(2) The currency of pledged foreign exchange is limited to US dollars, euros, (or German marks, French francs or Italian lire), Japanese yen, Hong Kong dollars, pounds sterling and Swiss francs.
(3) The amount of a Renminbi loan extended by a Renminbi Lending Bank to a Borrower may not exceed the calculated Renminbi amount of the foreign exchange pledge as calculated by using the basic Renminbi exchange rate posted by the People's Bank of China on the day the pledge is deposited (Calculated Amount of Pledged Forex). If during the term of the Renminbi loan a change in the Renminbi exchange rate occurs resulting in the principal and interest of the Renminbi loan exceeding the Calculated Amount of Pledged Forex (including interest), the Renminbi Lending Bank may recover the excess part of the loan in advance or require the Borrower to make up the shortfall in the pledged foreign exchange. If the principal and interest of the Renminbi loan become lower than the Calculated Amount, the Borrower may request an increase in the Renminbi loan or a refund of the excess part of the pledged foreign exchange.
(4) Renminbi Lending Banks shall calculate and settle interest on Renminbi loans and the pledged foreign exchange deposits respectively in accordance with the regulations of the People's Bank of China concerning the administration of interest rates.
(5) After a Renminbi loan contract has been completely performed, the Borrower shall transfer the pledged foreign exchange back into the original foreign exchange account. If the Borrower defaults, the Renminbi Lending Bank shall calculate the payable foreign exchange amount on the basis of the outstanding principal, interest and the corresponding charges as well as the cash foreign exchange buying rate posted by the said bank on that day and directly carry out foreign exchange settlement. Any excess foreign exchange shall be returned to the Borrower and if there is a shortfall the Borrower shall be required to make up the discrepancy.
7. Before the 10th of each month, the head offices of Renminbi Lending Banks shall report to the People's Bank of China of the area where they are located the details of the whole bank's extended and recovered Renminbi loans secured by foreign exchange for the preceding month.
8. Renminbi Lending Banks shall formulate their own implementing procedures for Renminbi loans secured by foreign exchange in accordance with the relevant provisions of the Lending General Provisions and this Circular, and submit them to the People's Bank of China for the record.
9. This Circular shall become effective on July 15 1999 and the provisions of Article 3 of document Yin Fa  No. 458 shall concurrently be repealed. If other regulations conflict with this Circular, this Circular shall govern.
All People's Bank of China branches (business management departments), all branches (foreign exchange control departments) of the State Administration of Foreign Exchange and all relevant commercial banks shall transmit the relevant particulars of this Circular to all of their branches in their jurisdiction as soon as possible, and adopt various methods to improve publicity and transparency. If during the course of implementation you encounter any problems, please promptly report to the People's Bank of China and State Administration of Foreign Exchange.