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China Issues Rules on Banking Assets Management Firms
The State Council issued an ordinance November 20 to regulate the activities of companies that are obliged to deal with the bad loans of local banks.
The statute, dubbed as "Provisions on Banking Assets Management Companies", was approved at the 32nd meeting of the Executive Committee of the State Council on November 1 and signed by Premier Zhu Rongji on November 11. The bylaw goes into effect upon the date of issuance.
The ordinance, comprising seven articles and 34 clauses, is designed to guide companies, which have been set up by the State Council specially for handling bad loans, to manage the assets from bad loans.
The statute defines the structure, obligations, financial sources, ways for handling debt rights and management of these companies.
The State Council will be the liquidator of these companies when their tasks have been completed and the final losses resulted from bad loans reported to the State Council, according to the ordinance.
These companies would be punished, when they violate regulations and laws, it says.
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