Law of the People's Republic of China on Commercial Banks(Amended in 2003)
Law of the People's Republic of China on Commercial Banks(Amended in 2003)
Law of the People's Republic of China on Commercial Banks (Amended in 2003)
Order of the President [2003] No. 13
December 27,2003
(Adopted at the 13th Session of the Standing Committee of the Eighth National People's Congress on May 10, 1995, and amended according to the Decision on Revising the Law of the People's Republic of China on Commercial Banks as adopted by the Sixth Session of the Standing Committee of the Tenth National People's Congress on December 27, 2003)
Contents
Chapter I General Provisions
Chapter II Establishment and Organization of Commercial Banks
Chapter III Protection for Depositors
Chapter IV Basic Rules Governing Loans and Other Businesses
Chapter V Finance and Accounting
Chapter VI Supervision and Management
Chapter VII Take-over and Termination
Chapter VIII Legal Liabilities
Chapter IX Supplementary Provisions
Chapter I General Provisions
Article 1 This Law is formulated in order to protect the lawful rights and interests of commercial banks, depositors and other clients, standardize the behaviors of commercial banks, improve the quality of loan assets, strengthen the supervision and management, ensure the sound and stable operations of commercial banks, safeguard financial order and promote the development of the socialist market economy.
Article 2 The "commercial banks" referred to in this Law are those enterprise legal persons which are established to absorb public deposits, issue loans, handle settlement of accounts and engage in other businesses in accordance with this Law and the "Company Law of the People's Republic of China".
Article 3 A commercial bank may engage in the following businesses in part or in whole:
1. Absorbing public deposits;
2. Offering short-term, medium-term and long-term loans;
3. Handling settlement of both domestic and overseas accounts;
4. Handling acceptance and discount of negotiable instruments;
5. Issuing financial bonds;
6. Issuing, cashing and undertaking the sale of government bonds as agents;
7. Buying and selling government bonds or financial bonds;
8. Undertaking inter-bank borrowing or lending;
9. Buying and selling foreign exchange by itself or as agents;
10. Engaging in bank card business;
11. Offering letter of credit services and guarantee;
12. Handling receipts and payments and insurance business as agents;
13. Providing safe boxes services; and
14. Other businesses as approved by the banking regulatory organ of the State Council.
The business scope of a commercial bank shall be determined by the Articles of association of the bank and reported to the banking regulatory organ of the State Council for approval.
A commercial bank may engage in foreign exchange settlement and sale businesses with the approval of the People's Bank of China.
Article 4 Commercial banks shall work under the principles of security, liquidity and efficiency, with full autonomy and assume sole responsibility for their own risks, profits and losses, and with self-restraint.
Commercial banks shall carry out business in accordance with the law free from any interference by entities or individuals.
Commercial banks shall bear civil liabilities independently with all their properties as legal persons.
Article 5 Commercial banks shall follow the principles of equality, free will, fairness, and good faith in their services to clients.
Article 6 Commercial banks shall protect the lawful rights and interests of the depositors against the encroachment of any entity or individual.
(Relevant articles: Cases 1)
Article 7 Commercial banks shall, in offering loans, make examination strictly on the credibility of the borrower, and provide loans on guarantee to ensure timely recovery of the loan.
Commercial banks are protected by laws in duly recovery of principals and interests of the loans they extended.
Article 8 Commercial banks shall carry out business in accordance with the relevant provisions of laws and administrative regulations, and shall not do harm to the interests of the state and social and public welfare.
Article 9 Commercial banks shall carry out business in light of the principle of fair competition, and shall not engage in any unfair competition.
Article 10 Commercial banks shall be subject to the supervision of the banking regulatory organ of the State Council according to law, unless otherwise the law prescribes that the relevant business thereof shall be subject to the supervision of any other regulatory department or organ, the provisions shall prevail.
Chapter II Establishment and Organization of Commercial Banks
Article 11 The establishment of a commercial bank shall be subject to the examination and approval of the banking regulatory organ of the State Council.
No entity or individual may engage in absorbing public deposits or other businesses of a commercial bank, nor shall any entity use the word "bank" in its name without the approval of the banking regulatory organ of the State Council.
Article 12 The following requirements shall be met in establishing a commercial bank:
1. Having Articles of association in accordance with this Law and the provisions of the Company Law of the People's Republic of China;
2. Having a registered capital that meets the minimum amount in accordance with the provisions of this Law;
3. Having directors and senior management personnel with professional knowledge in holding the post and work experiences;
4. Having sound organizations and management systems; and
5. Having a place of business accompanied with safeguarding measures meeting the requirements and other facilities in relation to the business.
Other prudential conditions shall also be met for the establishment of a commercial bank.
Article 13 The minimum amount of registered capital for establishing a national commercial bank shall be CNY1 billion. The minimum amount of registered capital for establishing a city commercial bank shall be CNY100 million, and for a rural commercial bank the minimum amount of registered capital shall be CNY50 million. The registered capital shall be paid-in capital.
The banking regulatory organ of the State Council may adjust the minimum amount of registered capital as required for prudential supervision, but the amounts thereof shall be no less than the amount as prescribed in the preceding paragraph.
Article 14 An applicant shall submit the following documents and materials to the banking regulatory organ of the State Council for establishing a commercial bank:
1. An application, specifying the name, locations, amount of registered capital, and business scope of the commercial bank to be set up;
2. A feasibility study report; and
3. Other documents and materials that shall be submitted as required by the banking regulatory organ of the State Council.
Article 15 Where an application for establishment of a commercial bank is in accord with the provisions of Article 14 hereof, an applicant shall fill in a formal application, and submit the following documents and materials:
1. The draft of the Articles of association;
2. Qualification certificates of the directors and senior management personnel to assume the posts;
3. Certificate of capital issued by a statutory capital verification organ;
4. Name list of shareholders and the amount of capital contributions and shares thereof;
5. Certificates of credibility and relevant documents of the shareholders who hold more than 5% of the registered capital;
6. Business policies and plans;
7. Place of business accompanied with safeguarding measures and documents of other facilities in relation to the business; and
8. Other documents and materials as required by the banking regulatory organ of the State Council.
Article 16 Commercial banks established upon approval shall be issued permit for operation by the banking regulatory organ of the State Council, and go through registration formalities with the department of industry and commerce administration upon the strength of the permit and get the business license.
Article 17 The organization form and setup of a commercial bank shall be applicable to the provisions of the Company Law of the People's Republic of China.
Where a commercial bank, which was established before the promulgation of this law has its organization form and setup not in full compliance with the provisions of the Company Law of the People's Republic of China, it may continue to operate under the original form and setup, and the date the provisions of the preceding paragraph shall apply is determined by the State Council.
Article 18 A wholly state-owned commercial bank shall set up a board of supervisors, the measures for its formation shall be prescribed by the State Council.
The board of supervisors shall carry out supervision over the quality of the loan assets of the wholly state-owned commercial bank, its asset-liability ratio, present and added values of the state-owned assets, etc., and the acts of the senior management personnel in violation of laws, administrative regulations, or Articles of association, as well as that acts damaging the interests of the bank.
Article 19 A commercial bank may set up branches both within and outside the territory of the People's Republic of China subject to businessneeds, which shall be subject to the examination and approval of the banking regulatory organ of the State Council.
......