The CBRC Solicits Opinions on the Management Rules of Entrusted Loans of Commercial Banks 

 

To further standardize the management of entrusted loans and promote sound development of entrusted loans businesses of commercial banks, recently the CBRC has drafted the Management Rules of Entrusted Loans of Commercial Banks (hereinafter referred to as the “Rules”).

 

The Rules includes 5 chapters and 34 articles. The first chapter is general principles, which clarifies the scope, definition, and principles of entrusted loans. The second chapter is business management, standardizing preconditions for application, capital sources, capital usage, contract requirement, and account management of entrusted loans. The third chapter is risk management, which puts forward management requirements in multiple areas including capital examination, authorization management, financial calculation, information reporting, business inspection, etc. The forth chapter is legal responsibility, proposing supervisory measures and penalties by the CBRC on banks with misconduct, and the fifth chapter is the appendix defining the right of interpretation and the time to implement.

 

The Rules has the following features:

 

First, the Rules clarifies the entrusting relationship. Commercial banks should fulfill their responsibilities and charge commission fees, without undertaking credit risks.

 

Second, the Rules standardizes management of entrusted loans businesses, defining the prerequisite for conducting businesses, contract requirements, capital sources and usage, account management and processing, etc.

 

Third, the Rules strengthens risk control of entrusted loans. It requires commercial banks to strictly separate entrusted loans businesses and self-operating businesses and to implement classified authorization management of entrusted loans.

 

Currently, the Rules is in the process of soliciting public opinions. The CBRC will make further revisions based on opinions received and issue the Rules at appropriate time.

 

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