Nanjing Branch of The PBC Issued A Pilot Policy for Cross-Border RMB Innovation to Support the Development of Jiangsu Free Trade Zone

Nanjing Branch of the People's Bank of China       April 14

To support the construction of China (Jiangsu) Pilot Free Trade Zone and promote the comprehensive and balanced development of cross-border RMB, on April 10, Nanjing Branch of the People's Bank of China issued the Notice of Nanjing Branch of the People's Bank of China on Further Promoting Cross-border RMB Work in China (Jiangsu) Pilot Free Trade Zone(Nan Yinfa [2020] No.51) (hereinafter referred to as the Notice), and decided to launch a new round of cross-border RMB innovation pilot business in Jiangsu Free Trade Zone.

First, further facilitate the use of RMB capital account income. The Noticedecided to carry out innovative business related to further facilitating the use of RMB capital account income in Nanjing and Lianyungang of Jiangsu Free Trade Zone. According to the spirit of the Notice of the People's Bank of China on Further Improving the Cross-border Business Policy of RMB to Promote Trade and Investment Facilitation(Yinfa [2018] No.3), on the premise of truthfulness and compliance, the funds in the RMB capital special deposit account and RMB overseas loan deposit account of enterprises in the region are allowed to be used to issue entrusted loans to domestic affiliated enterprises; Allow banking institutions to open multiple RMB capital special deposit accounts, RMB overseas loan deposit accounts and RMB equity transfer special deposit accounts for enterprises in the region; Allow non-investment foreign-invested enterprises in the region to make domestic equity investment with RMB capital in accordance with laws and regulations; Banks in the region are allowed to meet the reasonable demand for maintaining and increasing the value of funds in RMB capital special deposit accounts and RMB overseas loan deposit accounts of enterprises in the region through their own financial products in accordance with relevant regulations.

Second, further improve the RMB loan business of domestic banks for overseas projects. The Noticedecided to support domestic banking institutions to provide RMB financing for overseas projects such as overseas direct investment, overseas contracted projects and export buyer's credit carried out by enterprises in Nanjing and Suzhou areas of Jiangsu Free Trade Zone in the process of "going global" on the premise of true and compliant business. Domestic banking institutions can directly issue RMB loans for overseas projects through corresponding accounts opened by borrowers in overseas correspondent banks and RMB bank settlement accounts of overseas institutions opened in domestic banking institutions, or allocate funds to overseas branches or finance RMB funds from overseas subsidiaries and overseas correspondent banks according to the needs of handling RMB loans for overseas projects, which will be issued by overseas branches, subsidiaries or correspondent banks on their behalf. Enterprises in the region may provide guarantees or other credit enhancement measures to domestic banking institutions for their overseas investment enterprises.

Third, it is allowed to carry out cross-border RMB financing business of domestic banks to overseas enterprises. The Noticeclarifies that domestic banking institutions can directly provide cross-border RMB financing to overseas non-affiliated enterprises that have long-term stable trade or cooperative relations with themselves selected by enterprises in Nanjing and Suzhou areas of Jiangsu Free Trade Zone. Purchase of enterprise products; Domestic banking institutions may accept guarantees or other credit enhancement measures provided by enterprises in the region or overseas banking institutions for such cross-border RMB financing. Banks in the region can directly provide cross-border RMB financing to overseas enterprises for real and compliant current account transactions such as domestic goods procurement by overseas enterprises; Banks in the region may accept guarantees or other credit enhancement measures provided by domestic enterprises or overseas banking institutions for such cross-border RMB financing. The above-mentioned cross-border RMB financing business shall be handled through RMB bank settlement accounts of overseas institutions opened by overseas enterprises in domestic banking institutions.

Fourth, it is allowed to carry out cross-border RMB financing business from banks in the region to overseas banking institutions. The Noticeclarifies that banks in Nanjing and Suzhou areas of Jiangsu Free Trade Zone can grant credit to overseas banking institutions as a whole under the principles of truthfulness, compliance, correspondence between financing and specific projects, and controllable use of funds, and according to the specific projects provided by overseas banking institutions, after examination, they will issue RMB financing to overseas banking institutions one by one or in batches for overseas banking institutions to issue RMB financing to their customers. In principle, the ultimate purpose of such financing should be cross-border RMB payment by customers of overseas banking institutions under current account in China.

Fifth, support enterprises and banks to develop comprehensive cross-border RMB financial services programs. On the premise of actual needs, support banks to formulate and implement comprehensive cross-border RMB financial service plans for enterprises or enterprise groups in Jiangsu Free Trade Zone, covering cross-border settlement, financing, account services, value preservation and appreciation, exchange rate hedging, etc.

In the next step, Nanjing Branch of the People's Bank of China will further increase its support for Jiangsu Free Trade Zone, promote financial services to the real economy, and take the Free Trade Zone as the leader to lead the province's financial sector opening to a new height.