Six departments: standardize supply chain finance businesses, guide supply chain information service institutions to provide better financing services for small and medium-sized enterprises.

On April 30th, the People's Bank of China and five other departments issued a notice titled "Regarding the Standardization of Supply Chain Finance Business and Guiding Supply Chain Information Service Institutions to Better Serve Financing for Small and Medium-sized Enterprises", in which it mentioned encouraging the development of diversified supply chain finance models. The notice encourages commercial banks to strengthen their own capabilities, reach supply chain enterprises more directly, enhance the quality and efficiency of accounts receivable financing services, actively explore supply chain de-intermediation models, utilize supply chain "data credit" and "asset credit", support supply chain enterprises, especially small and medium-sized enterprises, in conducting credit loans and pledge financing based on orders, inventory, warehouse receipts, and other movable assets and rights. The notice also encourages commercial banks to improve the management system of supply chain bill business, optimize business processes and system functions, and promote the expansion of supply chain bill applications. It also calls for the study of promoting supply chain bill limited recourse services under market-based and rule-of-law approaches on the basis of equal and voluntary premises. Additionally, it guides financial institutions to orderly carry out supply chain bill asset securitization pilots under the premise of legal compliance and controllable risks, broadening bill financing channels. The original text reads: People's Bank of China official responds to questions from reporters regarding the notice "Regarding the Standardization of Supply Chain Finance Business and Guiding Supply Chain Information Service Institutions to Better Serve Financing for Small and Medium-sized Enterprises" In order to strengthen the standardization of supply chain finance business, improve the quality and efficiency of financial services for the real economy, and prevent potential financial risks, recently, the People's Bank of China, together with the China Banking and Insurance Regulatory Commission, the Supreme People's Court, the National Development and Reform Commission, the Ministry of Commerce, and the State Administration for Market Regulation, issued the notice "Regarding the Standardization of Supply Chain Finance Business and Guiding Supply Chain Information Service Institutions to Better Serve Financing for Small and Medium-sized Enterprises" (hereinafter referred to as the "Notice"), which will come into effect on June 15, 2025. A relevant official from the People's Bank of China responded to questions from reporters regarding the "Notice". Question: What is the background for the issuance of the "Notice"? In recent years, some financial institutions, supply chain core enterprises, and third-party companies have built supply chain information service systems to provide information services and technical support for various supply chain financial activities. Some supply chain core enterprises use the system to issue electronic certificates of accounts receivable, which are used for the confirmation, transfer, and financing of accounts receivable for enterprises in the supply chain. This has been welcomed by supply chain enterprises and has played a positive role in improving the security of payments and financing availability for small and medium-sized enterprises, as well as promoting the development of supply chain finance. Nonetheless, there are also some hidden problems and risks, such as credit expansion risks for core enterprises and the lack of necessary establishment standards and management specifications for supply chain information service systems. In order to implement the requirements of the Central Financial Work Conference to comprehensively strengthen financial supervision, effectively prevent and resolve financial risks, and bring all financial activities under supervision in accordance with the law, while further enhancing the quality and efficiency of financial services for the real economy and protecting the legitimate rights and interests of small and medium-sized enterprises, the People's Bank of China, together with the China Banking and Insurance Regulatory Commission and other departments, based on extensive solicitation of opinions, jointly formulated relevant policy normative documents to further clarify the direction of supply chain finance development, regulate the management of commercial bank supply chain finance, and improve the standardized management framework for electronic certificates of accounts receivable. Question: How does the "Notice" reflect the protection of the rights and interests of small and medium-sized enterprises? In order to effectively protect the legitimate rights and interests of small and medium-sized enterprises participating in supply chain financial services such as electronic certificates of accounts receivable, the "Notice" requires: First, to develop supply chain finance in a complete, accurate, and comprehensive manner in line with the new development concepts, and to deeply grasp the political and people-centered nature of financial work, with the service of the real economy, social livelihoods, and national strategies as the starting point, and the maintenance of fair and orderly markets as the focus, to promote the reduction of overall financing costs of the industrial chain supply chain, and achieve mutually beneficial development for upstream and downstream enterprises. Second, it requires supply chain core enterprises to promptly pay small and medium-sized enterprise amounts, share supply chain financing costs reasonably, refrain from using their advantages to delay payments to small and medium-sized enterprises or improperly increase accounts receivable from them, and avoid demanding unreasonable payment terms from small and medium enterprises, refraining from abusing non-cash payment methods to effectively extend payment terms. It is stipulated that the payment term for electronic certificates of accounts receivable should be within 6 months, with a maximum period of not more than 1 year. Third, it strengthens financial support for small and medium-sized enterprises, requiring relevant entities not to force on-chain enterprises to obtain financing services from specific financiers at interest rates higher than reasonable market rates, enhancing the quality and efficiency of accounts receivable financing. At the same time, it encourages commercial banks to develop diversified supply chain finance models, actively explore supply chain de-intermediation models, and support supply chain enterprises, especially small and medium-sized enterprises, in conducting credit loans and pledge financing based on orders, inventory, warehouse receipts, and other movable assets and rights. Fourth, it regulates the charging behavior of various entities towards on-chain enterprises, requiring supply chain core enterprises not to charge or receive improper fees under the pretext of accounts receivable confirmation for on-chain enterprises, and supply chain information service institutions to reasonably determine service fee standards, clarify fee objects, and publicize fee standards or establish agreements with relevant parties. Question: What are the main ideas for regulating the electronic certificates of accounts receivable business in the "Notice"? Firstly, it requires commercial banks to improve supply chain finance risk management. Commercial banks should establish a complete monitoring mechanism for debt based on supply chain core enterprises such as loans, bonds, bills, accounts payable, etc., strengthen the management of core risk control links, effectively fulfill the responsibility of loan management entities, prevent multiple credit lines and excessive credit to core enterprises, and avoid exacerbating upstream and downstream accounts receivable defaults through improper use of supply chain finance services. Secondly, it requires supply chain information service institutions to adhere to their own positioning. Supply chain information service institutions should carry out information services such as information aggregation, integration, according to the principles of legality, integrity, voluntarism, fairness, and self-discipline. Without obtaining licenses according to the law, they may not engage in financial activities such as payment settlement, financing guarantees, factoring financing, or loans, directly or indirectly collect funds, or allow information intermediaries to become credit intermediaries. Thirdly, it promotes industry self-discipline and business statistics monitoring. The People's Bank of China and other departments guide industry self-regulatory organizations such as the China Internet Finance Association to carry out self-regulation and management of supply chain information service institutions and electronic certificates of accounts receivable businesses. They research and establish self-regulatory management rules, conduct self-regulatory records and risk monitoring, supervise all business participating entities to operate in compliance and prudently, and guide the Shanghai Bill Exchange to organize electronic certificates of accounts receivable services.Collect voucher business information, conduct statistical monitoring and analysis, and provide information inquiry services.The fourth is to strengthen business supervision and policy coordination. The People's Bank of China and the China Banking and Insurance Regulatory Commission will carry out supervision and management of supply chain finance business according to their statutory responsibilities, while enhancing policy coordination and information sharing with relevant departments such as the Supreme People's Court, the National Development and Reform Commission, the Ministry of Commerce, the State-owned Assets Supervision and Administration Commission of the State Council, and the State Administration for Market Regulation. Together, they will strengthen policy guidance for relevant participants in the electronic certificate business for accounts receivable. Question: How should we understand the management approach towards supply chain information service institutions in the "Notice"? The "Notice," based on the principle of "managing business and managing risks," focuses on regulating supply chain information service institutions from the perspective of behavior supervision and functional supervision, aiming to clarify the functional positioning of supply chain information service institutions and their rights and obligations in the accounts receivable electronic certificate business. It aims to establish a multi-level monitoring and management system, enhance their role in supporting small and medium-sized enterprise financing within the supply chain finance sector while preventing financial risks. This includes: Firstly, requirements for the basic behavior of supply chain information service institutions are proposed, emphasizing the principles of legality, integrity, voluntarism, fairness, and self-discipline in carrying out information services such as the integration of supply chain information based on the "four flows merging into one." It is clarified that supply chain information service institutions should focus on information services, refrain from engaging in financial activities such as payment settlement, financing guarantees, factoring financing, or loans without proper licensing, and those engaged in enterprise credit reporting should comply with the legal requirements for filing as enterprise credit agencies, ensuring that all financial services are conducted under a licensed operation. Secondly, based on the functional positioning of supply chain information service institutions, requirements are set forth for their participation in the accounts receivable electronic certificate business, including: collecting trade background information for accounts receivable electronic certificates; ensuring proper control over the levels and number of certificate transfers, promptly conducting risk checks and alert reports regarding abnormal split transfer behaviors; halting services for entities with outstanding unrecovered accounts receivable electronic certificate payments, bond defaults, prolonged acceptance bill overdue situations, and new account receivable electronic certificates until the debts are settled as per agreements; setting reasonable fee standards, specifying fee objects, publishing fee schedules, or reaching agreements with relevant parties; ensuring the security, reliability, and stability of the supply chain information service system, safeguarding users' privacy and data security, accurately and comprehensively recording and properly storing relevant information, and fulfilling information reporting obligations, among others. Thirdly, establishing a self-regulation mechanism for supply chain information service institutions, departments such as the People's Bank of China will guide the China Internet Finance Association in strengthening the self-regulation of these institutions, organizing self-registrations and risk monitoring, enhancing the security and compliance assessment of supply chain information services. Subsequently, each supply chain information service institution will be encouraged to actively apply for self-registration during the transition period. For institutions identified with risks during the assessment process and unable to complete necessary reforms, commercial banks and others should restrict or refuse cooperation as required by the "Notice." People's Bank of China, China Banking and Insurance Regulatory Commission, Supreme People's Court, National Development and Reform Commission, Ministry of Commerce, State-owned Assets Supervision and Administration Commission of the State Council, State Administration for Market Regulation Notice Regarding Regulating Supply Chain Finance Business and Guiding Supply Chain Information Service Institutions to Better Serve Small and Medium-Sized Enterprise Financing (Yinfa [2025] No. 77) In order to thoroughly implement the spirit of the Third Plenary Session of the Twentieth Central Committee of the Party, the Central Economic Work Conference, and the Central Financial Work Conference, enhance the quality and efficiency of financial services to the real economy, reduce capital squeeze and overdue accounts of small and medium-sized enterprises, optimize the financing environment for small and medium-sized enterprises, strengthen the standardization of supply chain finance, and prevent and control related business risks, in accordance with the Law of the People's Republic of China on the People's Bank of China, the Banking Supervision and Administration Law of the People's Republic of China, the Commercial Banks Law of the People's Republic of China, the Regulation on Guaranteeing Payment of Funds for Small and Medium-Sized Enterprises, the Opinions on Regulating the Development of Supply Chain Finance and Supporting the Stable Circulation and Upgrading of the Supply Chain Industrial Chain (Yinfa [2020] No. 226), the Guiding Opinions on Promoting the Healthy Development of Chattel and Rights Financing Business (Yinbaohui Fa [2022] No. 29), and other laws, regulations, and document spirits, the following matters are notified as follows: I. Standardize the development of supply chain finance business and promote mutual benefit and development of the upstream and downstream of the supply chain A. Correctly grasp the connotation and orientation of supply chain finance. The development of supply chain finance should comprehensively and accurately implement the new development concept, deeply grasp the political and people-oriented nature of financial work, and base its services on the real economy, social livelihoods, and national strategic objectives, promoting the accelerated development of new productive forces, focusing on achieving "five major tasks" in finance. Focus on supporting the optimization and upgrade of the industrial chain and supply chain as the key point, targeting key industries such as manufacturing and key sectors, enhancing the resilience and competitiveness of the industrial chain and supply chain. Based on maintaining fair and orderly market as the standing point, promote the reduction of the overall financing costs of the industrial chain and supply chain, achieve mutually beneficial development for upstream and downstream enterprises. B. Encourage the development of diversified supply chain finance models. Encourage commercial banks to strengthen their own capabilities, reach out to supply chain companies more directly, enhance the quality and efficiency of accounts receivable financing services, actively explore supply chain de-nuclearization models, utilize data credit and physical credit in the supply chain, support supply chain companies, especially small and medium-sized enterprises in conducting credit loans, pledge financing based on orders, inventory, warehouse receipts, and other chattels and rights. Encourage commercial banks to improve the management system of supply chain bill business, optimize business processes and system functions, promote the expanded application of supply chain bills. Research the promotion of limited recourse services for supply chain bills under equal and voluntary conditions through market-oriented and legal means. Guide financial institutions to conduct pilot trials of securitization of supply chain bill assets in an orderly manner under the premises of compliance with laws and regulations, and controllable risks, to broaden bill financing channels. C. Promote timely payment of accounts receivable by supply chain core enterprises. Supply chain core enterprises should comply with laws, regulations, and relevant provisions such as the Regulation on Guaranteeing Payment of Funds for Small and Medium-Sized Enterprises, timely pay funds to small and medium-sized enterprises, safeguard the legitimate rights and interests of small and medium-sized enterprises, reasonably share the financing costs of the supply chain, refrain from using their dominant position to delay payments to small and medium-sized enterprises or improperly increase accounts receivable of small and medium-sized enterprises, not demand unreasonable payment terms from small and medium-sized enterprises, and not force small and medium-sized enterprises.Accept all kinds of non-cash payment methods and abuse non-cash payment methods to extend payment deadlines in disguise.() Adhere to the professional positioning of supply chain information service agencies. Supply chain information service agencies operating and managing supply chain information service systems should adhere to the principles of legality, integrity, voluntariness, fairness, and self-discipline, and do a good job of collecting and integrating supply chain information, such as the "integration of the four flows", to effectively protect the legitimate rights and interests of all participants in the supply chain finance. Supply chain information service agencies should return to the essence of information services. Without obtaining permission in accordance with the law, they shall not engage in financial activities such as payment settlement, financing guarantee, factoring financing, or loans, nor shall they directly or indirectly collect funds. They should prevent information intermediaries from becoming credit intermediaries, and those engaged in enterprise credit business should register as enterprise credit agencies in accordance with the law. It is strictly forbidden to carry out illegal financial activities in the name of supply chain finance. II. Standardize the management of supply chain finance by commercial banks and effectively fulfill the responsibility of loan management entities (Five) Improve the credit risk management of supply chain finance. Commercial banks should establish a sound debt monitoring mechanism based on core enterprises in the supply chain, including loans, bonds, bills, accounts payable, etc., carefully review the financing needs and use of funds of core enterprises, strengthen monitoring of core enterprises' production and operation, market sales, inventory turnover, payment of goods, and other operating conditions, timely track their credit ratings, credit balances, asset quality and other factors, and strictly control risks for core enterprises with deteriorating financial conditions, abnormally high prepayment or accounts payable ratios, or serious credit defaults. It is necessary to prevent excessive credit and abuse of supply chain finance exacerbating upstream and downstream accounts receivable. Active research should be conducted to establish a credit risk prevention and control system covering credit-granting enterprises in the supply chain. (Six) Effectively fulfill the responsibility of loan management entities. Commercial banks should strictly perform their main duties in loan investigation, risk assessment, credit management, and loan fund monitoring based on the establishment of a sound loan due diligence exemption mechanism. They should strengthen the management of core risk control links, improve loan risk control capabilities, not reduce risk control standards due to business cooperation, not outsource key links of pre-loan, mid-loan, and post-loan management to prevent "hollowing out" of loan management. Key steps such as loan fund disbursement should be independently decided by commercial banks, instructions should be initiated by commercial banks, and funds should be directly disbursed to borrowers' bank accounts, or if entrusted, commercial banks should fulfill the entrusted payment responsibility by ultimately paying the loan funds to the transaction object as agreed in the borrower's contract, to prevent supply chain information service agencies from intercepting, collecting, or misappropriating funds, and strictly implement the requirements of financial management departments on credit, payment, and anti-money laundering. (Seven) Standardize the management of supply chain finance business cooperation. If commercial banks cooperate with supply chain information service agencies in marketing and customer acquisition, information technology cooperation, they should follow the principles of fairness, impartiality, and transparency, sign cooperation agreements in a timely manner and clarify the rights and responsibilities of all parties, periodically evaluate the operational situation, management capabilities, and service quality of the cooperative supply chain information service agencies, and restrict or refuse cooperation in cases where supply chain information service agencies illegally collect loan funds, set unfair and unreasonable cooperation conditions, provide false customer information or data, charge fees that do not match the service quality, or violate other laws and self-discipline rules. Commercial banks constructing and operating supply chain information service systems should be limited to their own business use and should not provide services to external parties for constructing and operating supply chain information service systems. (Eight) Strengthen supply chain finance information data management. Commercial banks cooperating with supply chain information service agencies should strictly comply with laws and regulations such as the Civil Code of the People's Republic of China, the Personal Information Protection Law of the People's Republic of China, the Regulations on the Management of Credit Reporting Industries, and the Measures for the Administration of Credit Reporting Business (issued by the People's Bank of China) and follow the principles of legality, legitimacy, and necessity to fully and accurately obtain the information data required for identity verification, pre-loan investigation, risk assessment, and post-loan management, and take effective measures to verify its authenticity, and strengthen the protection of borrower information in terms of data usage, processing, and storage. Based on relevant self-assessment conditions, commercial banks should periodically assess the information security of cooperating supply chain information service agencies, the assessment content includes but is not limited to information protection compliance system, supervision mechanism, information processing norms, security measures, and related assessment costs should be borne by commercial banks. III. Standardize the receivables electronic certificate business, improve the management framework, and prevent business risks (Nine) The receivables electronic certificate mentioned in this notice refers to electronic records issued by supply chain core enterprises and other accounts receivable debtors to accounts receivable creditors such as upstream enterprises in the supply chain through the supply chain information service system based on real trade relationships, promising to pay the corresponding amount on time. The supply chain information service system is a system provided by commercial banks, supply chain core enterprises, or third-party companies for information services and technical support for receivables electronic certificates and other supply chain financial business or other supply chain management activities. Supply chain information service agencies are legal entities responsible for operating and managing supply chain information service systems and assume corresponding economic and legal responsibilities. (Ten) The issuance of receivables electronic certificates and their transfer among enterprises in the supply chain should have a genuine trade background and should not be based on advance payments. Supply chain information service agencies should do a good job of collecting trade background information. When commercial banks provide receivables electronic certificate financing services, they should rigorously review trade background materials, effectively identify and prevent fictitious trade background activities to obtain bank funds and transactions without trade backgrounds, and actively optimize the structure of funding supply, prioritizing support to technology innovation, advanced manufacturing, green development-related companies, and small and medium-sized enterprise financing, and strictly forbid the addition of implicit debts of local governments through this. (Eleven) The payment period of receivables electronic certificates should generally not exceed 6 months, with a maximum period of up to 1 year. For payment periods exceeding 6 months, commercial banks should strengthen the review of the rationality of the account terms and industry settlement practices issued for receivables electronic certificates and carry out financing business cautiously. (Twelve) If supply chain information service agencies provide the function of splitting and transferring receivables electronic certificates, they should strengthen self-discipline, reasonably control the level and number of certificate transfers, promptly conduct risk checks and alert reports on abnormal split and transfer behaviors, and prevent the interception, collection, and misappropriation of funds by supply chain core enterprises.The credit risk of private enterprises is spreading and cascading. Commercial banks should provide financing for the split electronic vouchers of accounts receivable, and should strengthen trade background checks. Financing should not be provided for accounts receivable electronic vouchers with unclear creditor-debtor relationships.(13) Accounts receivable electronic voucher financing shall be registered by the parties through the People's Bank of China Credit Center Chattel Financing Unified Registration and Publicity System, and shall be responsible for the authenticity, completeness, and legality of the registered content. Encourage the standardization of registration for accounts receivable electronic voucher financing businesses, improve the quality and efficiency of registration, and promote the healthy and standardized development of supply chain finance. (14) The fund settlement of accounts receivable electronic vouchers shall be conducted by commercial banks or institutions with relevant business qualifications. Supply chain information service institutions shall not use their own accounts as the fund settlement accounts for accounts receivable electronic voucher businesses, nor may they use or misappropriate related funds. When the accounts receivable electronic voucher payment is due, commercial banks providing settlement services should transfer funds according to the payment instructions or authorized fund transfers of the account opener of the accounts receivable electronic voucher (supply chain core enterprise), and take necessary measures to verify the validity and completeness of the payment instructions or authorization; if the on-chain enterprise holding the accounts receivable electronic voucher at maturity, the funds should be transferred to the designated account of the on-chain enterprise holding the accounts receivable electronic voucher; if the on-chain enterprise applies for factoring financing, the funds should be transferred to the designated account of the financing institution holding the accounts receivable electronic voucher; if the on-chain enterprise applies for pledge financing, the funds should be transferred separately to the designated accounts of the on-chain enterprise and the financing institution as agreed. (15) If the accounts receivable debtor of the supply chain core enterprise and others fail to pay the accounts receivable electronic voucher items as agreed upon maturity, or there are situations where bond defaults occur, acceptance bills are continuously overdue, etc., and the payment has not been completed, the supply chain information service institution is required to promptly cease providing services for the opening of new accounts receivable electronic vouchers. (16) The supply chain core enterprise shall not use its dominant position to force on-chain enterprises to obtain financing services from specific financing parties at levels higher than reasonable market interest rates; they shall not charge on-chain enterprises under the guise of accounts receivable confirmation, obtain improper fee refunds, or infringe on the legitimate rights and interests of on-chain enterprises. Supply chain information service institutions providing accounts receivable electronic vouchers related services shall reasonably formulate service fee standards, clarify fee recipients, publicize fee standards, or agree with relevant parties in contracts. Fees for supply chain information services and bank financing interest rates must be strictly distinguished. (17) Supply chain information service institutions must effectively guarantee the security, reliability, and stability of the supply chain information service system, protect user privacy and data security, accurately and completely record and properly preserve relevant information, support the safe and stable operation of accounts receivable electronic voucher businesses, and timely submit the necessary data to industry self-regulatory organizations, such as the Shanghai Bill Exchange, for self-discipline management, business statistics, and monitoring. (18) The People's Bank of China and other departments will guide industry self-regulatory organizations in the supply chain finance sector to conduct self-regulation and management of supply chain information service institutions and accounts receivable electronic voucher businesses, formulate self-regulatory rules, organize self-regulatory records and risk monitoring, supervise all business participants to operate in compliance and prudently, strengthen the security and compliance assessment of supply chain information services. Supply chain information service institutions, commercial banks, supply chain core enterprises, and other business participants must voluntarily join industry self-regulatory organizations. (19) The People's Bank of China and other departments will guide the Shanghai Bill Exchange to organize the collection of accounts receivable electronic voucher business information, conduct statistical monitoring and analysis, provide information inquiry services, and collaborate with industry self-regulatory organizations for data integration and information sharing. Supply chain information service institutions and commercial banks providing financing or fund settlement services for accounts receivable electronic vouchers must effectively carry out information reporting and assume responsibility for the authenticity, accuracy, and completeness of the reported information. (20) The People's Bank of China and the Financial Regulatory Commission will supervise and manage the supply chain finance business in accordance with this notice and statutory duties, strengthen policy coordination and information sharing with relevant departments such as the Supreme People's Court, the National Development and Reform Commission, the Ministry of Commerce, the State-owned Assets Supervision and Administration Commission, and the State Administration for Market Regulation, jointly enhance the policy guidance on accounts receivable electronic voucher business for relevant participants. Local financial management departments, in accordance with this notice and related responsibilities, will supervise and manage local financial organizations participating in accounts receivable electronic voucher business, such as commercial factoring companies. (21) This notice will be implemented from June 15, 2025. Regarding the related regulations for accounts receivable electronic voucher businesses, a two-year transition period is set from the date of implementation. During the transition period, all participants should actively carry out business rectification; after the transition period, all participants should strictly adhere to the requirements of this notice to strengthen business norms. Industry self-regulatory organizations and financial infrastructure should carry out related implementation work. Financial institutions such as China Development Bank, policy banks, rural cooperative banks, rural credit cooperatives, foreign banks, corporate financial companies, commercial factoring companies, and local financial organizations conducting related businesses should follow this notice. People's Bank of China Financial Regulatory Commission Supreme People's Court National Development and Reform Commission Ministry of Commerce State Administration for Market Regulation April 26, 2025 This article is adapted from the official website of the People's Bank of China, edited by GMTEight: Xu Wenqiang.