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Inter-Bank Call Money Market and Treasury Bonds Market Regulations Published
The People's Bank of China has printed up the Regulations for Financial Companies Entering the National Inter-Bank Call Money Market and Treasury Bonds Market. Aside from trust companies, members of the inter-bank bonds market includes commercial banks, publicly owned commercial banks, insurance companies, foreign banks approved to handle transactions in renminbi, securities companies, funds and financial companies.
According to the regulations, financial companies that want to apply to be a member of the national inter-bank call money market and inter-bank bonds market must be a legal work unit. If they do become members, their branches are not allowed to trade short-term loans or bonds.
Successful applicants will meet the following standards: the balance sheet ratio must meet requirements, it must have three consecutive years of profits, its business activities must fall within specific boundaries, it cannot have a criminal record of illegal business practices and the amount of short-term loans cannot exceed a certain ratio.
When the financial companies enter the call money market and begin short-term loans transactions, the longest period for a short-term loan will be seven days and the amount of the loan must not exceed the regulations and the loans cannot be renewed once the term expires. Financial companies cannot loan out amounts that exceed 100% of their real earnings.
The regulations also provide detailed explanations of the application procedures, bonds trusts, etc. for financial companies that enter the national inter-bank bonds market and trade in bonds.
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