State Council Issues Regulation on Shutting Down Financial Institutions

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Last updated at: (Beijing Time) Wednesday, December 05, 2001

State Council Issues Regulation on Shutting Down Financial Institutions

State Council Tuesday promulgated the Chinese version of the regulation about shutting down financial organizations. According to the 38-article regulation, in the case of any illegal or poor business performance that poses serious threat to the order of the financial market and the interests of the public, a financial organization will be shut down. Premier Zhu Rongji signed a decree to this effect on November 23.

The regulation is set up to strengthen supervision on the financial system, safeguard the order of the financial market and protect state and people's interests.

According to the regulation which comprises 38 articles, in the case of any illegal or poor business performance that poses serious threat to the order of the financial market and the interests of the public, a financial organization will be shut down.

The People's Bank of China is responsible for implementation of the regulation. The central bank will set up a special team to handle clearance affairs of the closed financial organizations. Central bank officials found to be derelict in their duty relating to approval of and supervision on such financial organizations will be punished according to laws and regulations.

Backgrounder:

With China's coming entry to the World Trade Organization (WTO), it becomes increasingly imperative to revise China's financial laws such as Commercial Bank Law and Insurance Law and laws and regulations governing Sino-foreign joint venture securities houses in line with WTO requirements.

The current Commercial Bank Law lacks regulations on capital supplementing mechanism and protection of the interests of consumers. Besides, there is no provision for withdraw of financial institutions.

The regulation issued by State Council in a bid to strengthen supervision on the financial system, safeguard the order of the financial market and protect state and people's interests will provide strong policy support to the practices of financial reform.

Click Here for Full Chinese Text of the Regulation

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