China’s Banking Regulator Targets Online and Extraterritorial Deposit Taking by Small-scale Provincial Banks


The China Banking and Insurance Regulatory (CBIRC) has reiterated its commitment to ensuring that the operations of small-scale regional banks remain confined to their licit jurisdictions.

According to a report from Cai Lianshe, CBIRC plans to “continue with the in-depth rectification of the Internet deposit and extraterritorial deposit operations of regional small and medium-sized banks, and seriously investigate and punish conduct such as high-interest solicitation of deposits and illegal acceptance of extraterritorial deposits (including by means of online channels).”

“According to preliminary regulatory investigations, at present the depository operation of local small and medium-sized banks is mainly local, and the proportion of deposits in other places is very low,” a source from CBIRC said. “The stability of liabilities has increased, and the trend of localized operation of institutions has become more pronounced.”

“Local small and medium-sized banks should adhere to the strategic position of serving their respective regions, serving ‘agriculture, rural areas and farmers,’ serving small and micro-enterprises, adhering to the principle that funds sourced locally should be used locally; strictly follow regulatory requirements when managing Internet deposit operations, and strictly prohibit the acceptance of large-sum personal deposits from outside jurisdictions.”

CBIRC also called for financial consumers to “enhance risk prevention awareness when handling deposit operations, pay attention to factors such as whether the business channels are legal and whether the interest rate level is reasonable,” as well as to “refrain from entrusting others to handle depositary business, and not be tempted by high interest rates.”