PBOC, SAFE adjust overseas lending policy for banks
The People's Bank of China (PBOC) and the State Administration of Foreign Exchange (SAFE) have adjusted policies for overseas lending by banking financial institutions. The changes aim to better support the real economy and regulate cross-border financial services.
Refining the 2022 framework
The People's Bank of China (PBOC) and the State Administration of Foreign Exchange (SAFE) have refined their policy framework for overseas lending by banking financial institutions.
This builds on the initial 2022 Notice, which established an integrated domestic and foreign currency management system, prioritizing domestic currency use to support the real economy and regulate cross-border financial services.
Since its implementation, the overseas lending business has grown steadily, with a continuous increase in loan scale and a rising proportion of RMB-denominated loans.
This expansion has been instrumental in facilitating the global operations of Chinese enterprises.
However, banks raised specific concerns regarding existing loan balance caps and the operational management of loan utilization.
Following comprehensive research, assessment, and direct consultations, the PBOC and SAFE jointly issued the latest Notice to introduce targeted adjustments and optimize these provisions, ensuring the framework remains responsive to market needs while maintaining regulatory oversight.
Higher caps, clearer rules
The new Notice introduces two key adjustments to existing overseas lending policies.
Firstly, it significantly raises the cap for the overseas loan balance.
The previous minimum cap of RMB2 billion is now RMB10 billion.
Leverage ratios are also adjusted: for foreign-funded banks in mainland China from 0.5 to 1.5, and for the Export-Import Bank of China from 3 to 3.5. These changes aim to better support these institutions in leveraging their business advantages and meeting the financing needs of overseas enterprises.
Secondly, the Notice improves management requirements for indirect lending.
Article 2 clarifies that when domestic banks disburse long-term RMB or foreign currency loans to overseas enterprises indirectly via overseas banks, these overseas banks may operate according to local laws.
Domestic banks must ensure compliance, prudent operation, and risk controllability, enhancing internal controls and defining fund use conditions through agreements.