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Regulators may relax rules for foreign banks

By Zhang Ran (China Daily)
Updated: 2006-09-21 08:34

Banking regulators may further loosen rules on foreign lenders dealing with renminbi business in response to claims by overseas players that the draft rule is too restrictive.

The China Banking Regulatory Commission (CBRC) and the Ministry of Commerce are likely to lower the minimum amount a foreign bank branch can accept for a single local renminbi deposit originally set at 1 million yuan (US$125,000) said a source from the regulatory body, adding that the two sides had yet to decide the specific amount.

The CBRC sent a draft version of the administrative rule on foreign banks to regulatory bodies and a group of foreign and domestic lenders for review in June.

The rule, which aims to regulate foreign players, will allow foreign lenders to deal with renminbi business at the end of the year in accordance with China's World Trade Organization (WTO) commitment.

But foreign banks claimed the draft rule has too high a threshold and is not conducive to overseas players expanding their renminbi business.

"The demand of foreign banks to draw a single renminbi deposit with a minimum amount of US$125,000 will hamper most local residents' ability to deposit their money in those banks," said a foreign banker who declined to be named.

A source said the banking regulator could not reach agreement on certain aspects of the rule with the Ministry of Commerce, which has a major role in ensuring China's WTO compliance.