CBIRC Puts an End to Cross-province Paper Bill Transactions


The China Banking and Insurance Regulatory Commission (CBIRC) has announced that paper bill transactions across province-level administrative entities will come to an end in six months time.

CBIRC has just released the “Notice Concerning Standardisation of Banking Sector Financial Institution Cross-province Bill Operations” (关于规范银行业金融机构跨省票据业务的通知), as part of efforts to standardise the sector and better prevent risk.

The Notice marks the first time that Chinese financial authorities have issued regulations that specifically target cross-province bill transaction, and introduce new requirements in two key areas.

The first is the requirement that banking sector financial institutions conduct cross-border e-bill and digitised paper bill transactions via China’s Electronic Commercial Draft System (电子商业汇票系统),  the China bill transaction system or other infrastructure for the Chinese bill market.

Chinese banks have also been required to cease cross-border paper bill transactions six months following the date of the release of the Notice.

The second is the requirement that banking sector financial institutions prudently undertake cross-province bill acceptance and discounting operations, and where they are planning to undertake or already undertake related transactions, that they establish internal  management systems for credit extension in other regions.

Chinese banks are required to implement strict management of authorisations, and the head offices of banks are required to perform diversified authorisations based on relevant administrative provisions, the risk control capability of branch entities, the economic development status of different regions, as well as different target customer categories.

Chinese banks will also be required to establish coordination and control mechanisms between branches in order to avoid internal competition, and maintain the principle that customers handle acceptance and discounting of bills at the branch bank for their particular location.