CBRC Releases Regulation on Financial Cooperation Business

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Aug. 24 – China Banking Regulatory Commission recently released a regulation on financial cooperation business, aiming to better regulate banking credit and financial cooperation.

Yinjianfa [2010] No. 72, issued on August 10, states that the CBRC should further regulate the financing of bank credit and financial cooperative business in fund companies. Specifically, the balance of the financing business cannot exceed 30 percent of bank credit for financial cooperation.

Furthermore, the regulation stipulates that the financing business includes, but is not limited to, trust loans, the transfer of credit or paper assets, investment which is affixed additional repurchase or has repurchase options, stock collateral financing, and other asset securitization businesses.

Moreover, the regulation specifies that commercial banks should include all off-balance-sheet assets on their balance sheets; large banks and small banks should both make capital provisions at a capital adequacy rate of 11.5 percent and 10 percent, respectively.