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	CIRCULAR OF THE STATE ADMINISTRATION OF FOREIGN EXCHANGE ON THE DOMESTIC INTERBANK FOREIGN EXCHANGE FINANCING BUSINESS UNDERTAKEN BY INSURANCE COMPANIES

	(No.105 [2003] of the State Administration of Foreign Exchange promulgated on September 1, 2003, which shall come into force as of October 1, 2003)


SUBJECT : INSURANCE COMPANIES; FOREIGN EXCHANGE FINANCING BUSINESS
ISSUING DEPARTMENT : STATE ADMINISTRATION OF FOREIGN EXCHANGE
ISSUE DATE : 09/01/2003
IMPLEMENT DATE : 10/01/2003
LENGTH : 704 words
TEXT :

In order to boost up the fluidity of the foreign exchange capitals of the insurance companies, and improve the solvency of foreign exchange of the insurance companies, the State Administration of Foreign Exchange decides, after negotiation with the China Insurance Regulatory Commission, to allow the insurance companies to engage in domestic interbank foreign exchange borrowing (lending) business. We hereby make the following notice on relevant issues:

I. The parent companies of Chinese-funded insurance companies, parent companies of Sino-foreign equity joint venture insurance companies, and the branch companies (hereinafter refer to insurance companies) set up directly by foreign insurance companies within China, which have the qualifications for undertaking the "interbank foreign exchange borrowing (lending) " business after being approved by the State Administration of Foreign Exchange, may carry out domestic interbank foreign exchange borrowing(lending) business through the China Foreign Exchange Trading Center. Other domestic insurance companies (including the branches of the above said insurance companies) are prohibited from engaging in interbank foreign exchange borrowing (lending) activities.

II. An insurance company shall participate in domestic interbank foreign exchange borrowing (lending) activities through the China Foreign Exchange Trading Center, the opposite party of the interbank borrowing (lending) shall be domestic financial institutions that have signed contracts with the China Foreign Exchange Trading Center. An insurance company is refrained from carrying out interbank foreign exchange borrowing (lending) activities with foreign institutions.

III. The term for handling the interbank foreign exchange borrowing (lending) business by an insurance company shall not exceed 4 months. Neither the total amount of capital borrowed nor that lent may exceed 50% of the foreign exchange capital money of a company. The single sum of capital borrowed may not exceed 10% of the foreign exchange capital of a company, and the single sum of capital lent shall not exceed 15% of the foreign exchange capital of a company.

IV. An insurance company which has the qualification of engaging in interbank foreign exchange borrowing (lending) business after approval, shall, when undertaking interbank foreign exchange borrowing (lending) business, hold the License for Undertaking Foreign Exchange Business that lists the qualification for engaging in "interbank foreign exchange borrowing (lending) business" to sign "Agreement on Intermediary Services for Interbank Borrowing (lending) " with the China Foreign Exchange Trading Center, and then may handle the interbank foreign exchange borrowing (lending) business through the China Foreign Exchange Trading Center. Insurance companies participating in domestic interbank foreign exchange borrowing (lending) activities shall observe the relevant provisions of the State Administration of Foreign Exchange and the China Insurance Regulatory Commission, and abide by the relevant operational rules of the China Foreign Exchange Trading Center.

V. Insurance companies engaging in interbank foreign exchange borrowing (lending) business shall submit reports of "Statistics of the Insurance Companies for the Management of Foreign Exchange Capital" (see No. 27 [2003] of the State Administration of Foreign Exchange) to the State Administration of Foreign Exchange quarterly.

VI. The China Foreign Exchange Trading Center shall provide intermediary services of the interbank foreign exchange borrowing (lending) for insurance companies according to relevant provisions of the State Administration of Foreign Exchange, strictly supervise the interbank foreign exchange borrowing (lending) activities of the insurance companies, and report to the State Administration of Foreign Exchange the situations of the insurance companies on handling the interbank foreign exchange borrowing (lending) monthly.

VII. The domestic interbank foreign exchange borrowing (lending) business opened by an insurance capital management company with its own foreign exchange capital, and that opened by the entrustment of an insurance company, shall be handled by reference to the preceding provisions, and the relevant provisions of the State Administration of Foreign Exchange and those of the China Insurance Regulatory Commission shall be observed.

VIII. The present Circular shall be implemented as of the date of October 1, 2003. For insurance companies that have applied for the License for Undertaking Foreign Exchange Business, which is still in the period of validity, shall apply to the State Administration of Foreign Exchange for adding the qualification of "interbank foreign exchange borrowing (lending) " business, according to the provisions of Article 12 of the "Interim Provisions on Foreign Exchange Administration of Insurance Business", and get a new License for Undertaking Foreign Exchange Business prescribed.