The Foreign Exchange Bureau Stimulates The Market Players To Relax Their Burden And Stimulate Their Vitality.

RMB capital account convertibility target is getting closer and closer to us. The State Administration of foreign exchange has recently made "subtraction" for the administrative licensing items under the capital account. It has promulgated the notice on Issuing the regulations on cross border guarantee foreign exchange management, streamlined the management process, improved the management mode, and realized the basic convertibility of cross-border guarantee, aiming at easing the burden of enterprises and banks and so on, so as to better stimulate the vitality of the market.

Cross border guarantee refers to a guaranty act written by a guarantor to the creditor in writing, legally binding and committed to perform relevant payment obligations in accordance with the guarantee contract. The importance of such market participants is that they may generate cross-border transactions such as capital cross-border payments or cross-border transfer of asset ownership.

　　 Foreign Exchange Bureau According to the interpretation, in accordance with the guaranty parties register In fact, cross border guarantees are mainly divided into two types: internal and external loans. The term "internal loan" refers to the cross border guarantee of the guarantor's registered place in the territory, the debtor and the creditor's place of registration. Outward guarantee refers to the cross border guarantee within the territory of the guarantor's registered place outside the country, the debtor and the creditor's place of registration.

In 2010, in order to support the "going out" of domestic institutions and meet the policy needs of overseas investment enterprises for credit support within the territory, the foreign exchange bureau substantially improved the management of external guarantees, and provided the domestic financial institutions with financing external guarantees from the original approval method to the balance management, while greatly reducing the relevant qualification threshold, simplifying the management process, and canceling the performance approval. In 2012, the authorized authority of some financial institutions' external financing guarantee index was further decentralized to local branches.

The biggest highlight of this new regulation is that Internal loan There are no balance indicators approved, and prior approval has also been abolished. Registration is the main management tool, and the qualification restrictions on guarantor and guarantor's asset liability ratio and related requirements have been basically abolished.

The new regulation not only abolished the quantity control of internal loan, but also abolished the restriction on the relationship between domestic guarantor and foreign borrower. However, if the secured offshore debt instrument is a bond, the domestic guarantor must be the direct or indirect shareholder of the offshore borrower. In addition, the income from overseas bond issuance must be used for the domestic guarantor's business or investment overseas, and the business or investment has been approved by the regulatory authority.

There is a strong practical demand for the internal loan business. In recent years, with the large number of large enterprises in China going abroad, the capital demand of subsidiaries and affiliates set up overseas has been increasing. However, because of their small scale and low traffic volume, they can not obtain credit support from overseas banks. In the meantime, it is difficult for companies in the territory to direct domestic funds to offshore companies. Many domestic enterprises often face financing difficulties in the process of "going out". Facing the current situation that domestic banks are not acclimatized by the overseas bank financing mode, we can solve the capital problem by reasonably and accurately using the bank's internal guarantee loan business.

Because of the stricter foreign exchange management policy and the less foreign loan business, but since July 30, 2010, the State Administration of foreign exchange issued the notice on the management of external guarantee for domestic institutions and the new regulations, we can see that the foreign exchange bureau has made major adjustments in the management of foreign loans, while improving the cross-border guarantee of foreign exchange management, it has also provided more convenient investment and trade services for enterprises.