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	DECISION OF THE STANDING COMMITTEE OF THE NATIONAL PEOPLE'S CONGRESS ON AMENDING THE LAW OF THE PEOPLE'S REPUBLIC OF CHINA ON COMMERCIAL BANKS

	(Order of the President of the People's Republic of China (No. 13), December 27, 2003: Decision of the Standing Committee of the National People's Congress on Amending the "Law of the People's Republic of China on Commercial Banks", which was adopted by the sixth session of the Standing Committee of the tenth National People's Congress of the People's Republic of China on December 27, 2003, is hereby promulgated, and will come into force as of February 1, 2004)


SUBJECT : COMMERCIAL BANKS; AMENDMENT
ISSUING DEPARTMENT : THE STANDING COMMITTEE OF THE NATIONAL PEOPLE'S CONGRESS OF THE PEOPLE'S REPUBLIC OF CHINA
ISSUE DATE : 12/27/2003
IMPLEMENT DATE : 02/01/2004
LENGTH : 3,042 words
TEXT :

It is decided at the sixth session of the Standing Committee of the Tenth National People's Congress on the following amendments to the Law of the People's Republic of China:

1. Item (4), paragraph 1 of Article 3 is modified as: "Handling acceptance and discount of negotiable instruments"; item (7) is modified as: "Buying and selling government bonds or financial bonds"; one item is added as item (10), that is "Engaging in bank card business".

One paragraph is added as paragraph 3, that is, "A commercial bank may undertake foreign exchange settlement and selling businesses after being approved by the People's Bank of China".

2. Paragraph 1 of Article 4 is modified as: "Commercial banks shall work under the principles of safety, fluidity and efficiency, with full autonomy and assume sole responsibility for their own risks, profits and losses, and with self-restraint".

3. Article 10 is modified as: "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 other regulatory departments or organs, the provisions will prevail". And the "People's Bank of China" prescribed in Article 3, Article 11, and Articles 14 through 16, Articles 19 through 21, Article 23, paragraph 1 of Article 24, Article 25, Article 39, Article 56, Article 62, Article 64, Article 65, Articles 67 through 71 is modified as the "banking regulatory organ of the State Council".

4. Item (3), paragraph 1 of Article 12 is modified as: "Having directors and senior management personnel with professional knowledge for holding the post and work experiences".

Paragraph 2 is modified as: "Other sound conditions shall also be met for the establishment of a commercial bank".

5. Article 13 is modified as: "The minimum amount of registered capital for establishing a national commercial bank shall be RMB 1billion Yuan. The minimum amount of registered capital for establishing a city commercial bank shall be RMB 100 million Yuan, and for a rural commercial bank, the minimum amount of registered capital shall be RMB 50 million Yuan. The registered capital shall be paid-in capital.

The banking regulatory organ of the State Council may adjust the minimum amount of registered capital upon the requirements for sound supervision, but the amounts thereof shall be no less than that prescribed in the preceding paragraph".

6. Item (2) of Article 15 is modified as: "Qualification certificates of the directors and senior management personnel to assume the posts"; item (5) is modified as: "Certificates of credibility and relevant documents of the shareholders who hold more than 5% of the registered capital".

7. Paragraph 1 of Article 18 is modified as: "A solely state-owned commercial bank shall set up a board of supervisors, the measures for its formation shall be prescribed by the State Council".

8. Item (5), paragraph 1 of Article 24 is modified as: "Alteration of shareholders who hold more than 5% of the total amount of capital or shares".

Paragraph 2 is modified as: "In case of replacing any director or senior management personnel, a commercial bank shall report to the banking regulatory organ of the State Council for examination of their qualifications for assuming the posts".

9. The expression "shall not be appointed as senior management personnel of a commercial bank" prescribed in Article 27, is modified as "shall not be appointed as directors or senior management personnel of a commercial bank".

10. Article 28 is modified as: "Any entity or individual who wants to buy more than 5% of the total amount of shares of a commercial bank, shall be subject to the approval of the banking regulatory organ of the State Council in advance".

11. Paragraph 2 of Article 41 is cancelled.

12. Paragraph 2 of Article 42 is modified as: "In case that a borrower fails to repay the guaranteed loan on time, the commercial bank granting the loan shall have the right to ask the guarantor to repay the principal and interest of the loan or enjoy the priority of repayment by the guaranty according to law. Realties or share rights obtained by a commercial bank due to exercising the bank's ownership of mortgage or pledge shall be handled within two years as of the date of obtaining them by the bank".

13. Article 43 is modified as: "No commercial bank shall undertake the businesses of trust and investment and securities dealing business, nor shall they invest in the non-self-use real property or non-bank financial institutions and enterprises, unless it is otherwise prescribed by the state".

14. Paragraph 1 of Article 46 is modified as: "Commercial banks shall observe the provisions of the People's Bank of China when making inter-bank borrowing or lending. No capital borrowed may be used for granting loans on fixed assets or for investment".

15. Article 50 is modified as: "A commercial bank may charge handling fees prescribed when handling business or providing services. The charging items and standards shall be formulated by the banking regulatory organ of the State Council or the People's Bank of China according to their respective functions or jointly with the departments in charge of the price under the State Council".

16. Article 54 is modified as: "Commercial banks shall, in accordance with laws and the unified accounting system of the state, as well as the relevant provisions of the banking regulatory organ of the State Council, establish and perfect the finance and accounting systems of their own".

17. Article 55 is modified as: "A commercial bank shall, according to the relevant state provisions, truly record and reflect their business activities and financial status, work out annual financial report, and report to the banking regulatory organ of the State Council, the People's Bank of China, and the financial departments of the State Council in time. No commercial bank may set up any other accounting books in addition to the legal accounting books".

18. Article 59 is modified as: "A commercial bank shall, according to relevant provisions, formulate its own business regulations, and establish and perfect the risk control and internal control systems of the bank".

19. Article 61 is modified as: "A commercial bank shall report and send balance sheets, statements of profits, and other financial statements and statistical reports and documents to the banking regulatory organ of the State Council and the People's Bank of China".

20. One paragraph is added to Article 62 as paragraph 2, that is, "The People's Bank of China has the right to make examination on and supervision over the commercial banks in accordance with the provisions of Article 32 and Article 33 of the Law of the People's Republic of China on the People's Bank of China".

21. One paragraph is added to Article 73 as paragraph 2, that is, "In case of the circumstances prescribed in the preceding paragraph, the banking regulatory organ of the State Council shall order the commercial banks to correct, and confiscate the illegal gains if any, or impose a fine of one time up to five times the illegal gains if the illegal gains are more than RMB 50,000 Yuan; if there are no illegal gains or the illegal gains are less than RMB 50,000 Yuan, a fine of RMB 50,000 Yuan up to RMB 500,000 Yuan shall be imposed".

22. Article 74 is modified as: "In case a commercial bank has any one of the following circumstances, the banking regulatory organ of the State Council shall order it to correct, and confiscate the illegal gains if any, or impose a fine of one time up to five times the illegal gains if the illegal gains are more than RMB 500,000 Yuan; if there are no illegal gains or the illegal gains are less than RMB 500,000 Yuan, a fine of RMB 500,000 Yuan up to RMB 2 million Yuan shall be imposed; if the circumstances are especially serious or the bank fails to correct within a prescribed time limit, the banking regulatory organ of the State Council may order it to straighten out by stopping business operation or revoke its business license; in case it constitutes a crime, it shall be subject to criminal liabilities:

(1) Establishing branches without authorization;

(2) Making division or merger without authorization or failing to apply for approval for matters altered in violation of regulations;

(3) Increasing or decreasing interest rate in violation of regulations or absorbing deposits or granting loans by other illegal means;

(4) Leasing or lending permit for operation;

(5) Buying and selling foreign exchange by itself or as an agent without authorization;

(6) Buying and selling government bonds or issuing or buying and selling financial bonds without authorization;

(7) Engaging in trust & investment or securities dealing business, investing to non-self-use realty or non-bank financial institutions and enterprises in violation of state provisions; or

(8) Granting credit loans or surety loans to any of its connected parties on conditions superior to the similar loans granted to other borrowers. "

23. One Article is added as Article 75, namely, "In case a commercial bank has any of the following acts, the banking regulatory organ of the State Council shall order it to correct and impose a fine of RMB 200,000 Yuan up to RMB 500,000 Yuan; if the circumstances are especially serious or the bank refuses to correct within a prescribed time limit, the banking regulatory organ of the State Council may order them to straighten out by stopping business operation or revoke its business license; if it constitutes a crime, it shall be subject to criminal liabilities according to law:

(1) Refusing or impeding the inspection and supervision of the banking regulatory organ of the State Council;

(2) Providing financial report or statement and statistical report, which are false or conceal any important facts; or

(3) Failing to abide by the provisions on capital sufficiency, deposit-loan ratio, assets fluidity ratio, proportion of loans granted to a same borrower, and other provisions of the banking regulatory organ of the State Council on the management of the assets liability proportions".

24. One Article is added as Article 76, namely, "In case a commercial bank has any of the following circumstances, the People's Bank of China shall order it to correct, and confiscate the illegal gains if any, or impose a fine of one time up to five times the illegal gains if the illegal gains are more than RMB 500,000 Yuan; if there are no illegal gains or the illegal gains are less than RMB 500,000 Yuan, a fine of RMB 500,000 Yuan up to RMB 2 million Yuan shall be imposed; if the circumstances are especially serious or the bank refuses to correct within a prescribed time limit, the People's Bank of China may suggest the banking regulatory organ of the State Council ordering it to straighten out by stopping business operation or revoking its business license; in case it constitutes a crime, it shall be subject to criminal liabilities:

(1) Handling exchange settlement or selling without authorization;

(2) Issuing, buying or selling financial bonds at the inter-bank bonds markets or seeking loans overseas without authorization; or

(3) Making inter-bank borrowing or lending in violation of regulations".

25. One Article is added as Article 77, namely, "In case a commercial bank has any of the following circumstances, the People's Bank of China shall order it to correct, and impose a fine of RMB 200,000 Yuan up to RMB 500,000 Yuan; if the circumstances are especially serious or the bank refuses to correct within a prescribed time limit, the People's Bank of China may suggest the banking regulatory organ of the State Council to order it to straighten out by stopping its business operations or revoking its business license; in case it constitutes a crime, it shall be subject to criminal liabilities:

(1) Refusing or impeding the inspection and supervision of the banking regulatory organ of the State Council;

(2) Providing financial report or statement and statistical report which are false or conceal any important facts; or

(3) Failing to pay deposit reserve funds according to the proportion prescribed by the People's Bank of China".

26. Article 75 is cancelled.

27. Article 76 is changed into Article 78, which is modified as: "In case a commercial bank has the circumstances prescribed in Article 73 to Article 77 of this Law, the directors or senior management personnel directly responsible and other persons directly liable shall be imposed disciplinary punishment; if it constitutes a crime, they shall be subject to criminal liabilities according to law".

28. Article 77 is changed into Article 79, which is modified as: "In any one of the following circumstances, the banking regulatory organ of the State Council shall order the commercial banks to correct, and confiscate the illegal gains if any, or impose a fine of one time up to five times the illegal gains if the illegal gains are more than RMB 50,000 Yuan; if there are no illegal gains or the illegal gains are less than RMB 50,000 Yuan, a fine of RMB 50,000 Yuan up to RMB 500,000 Yuan shall be imposed:

(1) Using the word "bank" in its name without authorization;

(2) Buying more than 5% of the total shares of the commercial bank without authorization; or

(3) Opening an account to deposit the capital of the entity in any individual person's name".

29. Article 78 is changed into Article 80, which is modified as: "In the event that a commercial bank fails to report relevant documents and materials to the banking regulatory organ of the State Council as required, the banking regulatory organ of the State Council shall order it to correct, or impose a fine of RMB 100,000 Yuan up to RMB 300,000 Yuan if it refuses to correct within a prescribed time limit.

In case a commercial bank fails to report relevant documents or materials to the People's Bank of China as required, the PBC shall order it to correct, or impose a fine of RMB 100,000 Yuan up to RMB 300,000 Yuan if it refuses to correct within a prescribed time limit".

30. Article 79 is changed into Article 81, which is modified as: "Those who set up a commercial bank without the approval of the banking regulatory organ of the State Council or absorb public deposits illegally or in any disguised form, which constitutes a crime, shall be subject to criminal liabilities according to law; and the bank shall be banned the by banking regulatory organ of the State Council.

Those who fabricate, change or transfer the business license of a commercial bank, which constitutes a crime, shall be subject to criminal liabilities according to law".

31. One Article is added as Article 83, namely, "In case a commercial bank has any act prescribed in Article 81 and Article 82 of this Law, which does not constitute a crime, the banking regulatory organ of the State Council shall confiscate the illegal gains if any, or impose a fine of one time up to five times the illegal gains if the illegal gains are more than RMB 500,000 Yuan; if there are no illegal gains or the illegal gains are less than RMB 500,000 Yuan, a fine of RMB 500,000 Yuan up to RMB 2 million Yuan shall be imposed".

32. Article 81 is changed into Article 84, of which paragraph 1 is modified as: "Where an employee of a commercial bank seeks for or accepts bribery by availing himself of his position or accepts discounts or service charges of any kind in violation of state provisions, which constitutes a crime, he shall be subject to criminal liabilities according to law; or shall be imposed disciplinary punishment if his acts are not serious enough to constitute a crime".

33. Article 82 is changed into Article 85, which is modified as: "In case an employee of a commercial bank defalcates, embezzles or encroaches the capital of the bank or the clients by availing himself of his position, which constitutes a crime, he shall be subject to criminal liabilities according to law; or shall be imposed a disciplinary punishment if his act is not serious enough to constitute a crime".

34. One Article is added as Article 89, to wit, "In case a commercial bank violates the provisions of this Law, the banking regulatory organ of the State Council may disqualify the directors or senior management personnel directly responsible for holding the post for a certain period of time or even disqualify them for lifetime for holding the post, or prohibit the directors or senior management personnel directly responsible and other persons directly liable from holding the post for a certain period of time or even ban them from undertaking the banking work for lifelong in light of the specific circumstances.

In case the act of a commercial bank is not serious enough to constitute a crime, the directors or senior management personnel directly responsible and other persons directly liable shall be given warnings or imposed a fine of RMB 50,000 Yuan up to RMB 500,000 Yuan".

35. Article 86 is changed into Article 90, which is modified as: "If a commercial bank and its employees refuse to accept the decisions of punishment by the banking regulatory organ of the State Council or the People's Bank of China, they may lodge a complaint to the people's court in accordance with the Administrative Procedure Law of the People's Republic of China".

36. Article 88 is changed into Article 92, which is modified as: "The provisions of this Law shall be applicable to the foreign invested commercial banks, Sino-foreign joint venture commercial banks, and branches of the foreign commercial banks, unless otherwise there are provisions by laws and administrative regulations, the provisions shall prevail".

37. Article 90 is changed into Article 94, which is modified as: "The relevant provisions of this Law shall be applicable to the postal enterprises for their handling of the relevant business of commercial banks".

This Decision shall be implemented as of February 1, 2004.

The Law of the People's Republic of China on Commercial Banks shall be modified in accordance with this Decision and the order of the relevant clauses thereof shall also be adjusted accordingly, and will be promulgated anew.