The People's Bank of China: Further support domestic banking financial institutions and foreign institutions in conducting renminbi cross-border interbank financing business.

On February 26th, the People's Bank of China issued a notice regarding the Renminbi cross-border interbank financing business of banking financial institutions. The notice states that domestic banks shall not have a net outflow of Renminbi funds to overseas institutions exceeding the limit of net outflows in Renminbi cross-border interbank financing. Domestic banks should establish an internal early warning mechanism, and when the net outflows of Renminbi cross-border interbank financing reach 80% of the limit, they should issue early warning alerts to the relevant business departments. The original text is as follows: Notice of the People's Bank of China on the Relevant Matters of Renminbi Cross-border Interbank Financing Business of Banking Financial Institutions (Yinfa [2026] No. 51) Headquarters of the People's Bank of China in Shanghai, branches of provinces, autonomous regions, municipalities directly under the Central Government, and separately listed cities; China Development Bank, Export-Import Bank of China, Agricultural Development Bank of China, commercial banks in various countries, China Postal Savings Bank, and various joint-stock commercial banks: In order to further support domestic banking financial institutions (hereinafter referred to as domestic banks) in conducting Renminbi cross-border interbank financing business with foreign institutions, develop the Renminbi offshore market, improve the macro-prudential management of cross-border capital flows, in accordance with the "Law of the People's Republic of China on the People's Bank of China" and other laws and regulations, we hereby notify the relevant matters as follows: 1. The Renminbi cross-border interbank financing referred to in this notice refers to the core business of inflow and outflow of Renminbi funds between domestic banks and foreign institutions, including account financing, bond repurchase, and other fund transfer business with substantive debtor-creditor relationships, excluding investment between domestic banks and foreign institutions or purchase of interbank certificates of deposit, bonds, and other debt instruments. Domestic banks engaging in Renminbi cross-border interbank financing should comply with the relevant policy provisions and implement the relevant provisions of full-scale macro-prudential management of cross-border financing business. 2. The term "domestic banks" in this notice refers to banks legally established in China with the ability to conduct international settlement business, including Chinese-funded banks, foreign-owned banks, Sino-foreign joint venture banks, and foreign bank branches in China; foreign institutions refer to foreign central banks or monetary authorities, international financial organizations, sovereign wealth funds, commercial banks established abroad in accordance with the law (including branches and subsidiary branches of domestic banks established abroad), insurance companies, securities companies, fund management companies, futures companies, trust companies, and other financial institutions, as well as long-term institutional investors such as pension funds, charitable funds, and donation funds. 3. Support domestic banks in accordance with market demand, conduct Renminbi cross-border interbank financing business in compliance with legal and compliant principles, and controllable risks. The relevant business of domestic Chinese-funded banks, foreign-owned banks, and Sino-foreign joint venture banks shall be uniformly managed by the bank's head office, and according to the principle of substance over form, all Renminbi cross-border interbank financing business shall be included in the scope of management to establish sound risk management and internal control mechanisms. 4. The term of Renminbi cross-border interbank financing business shall follow the relevant business regulations. 5. The net outflow of Renminbi funds from domestic banks to foreign institutions shall not exceed the limit of net outflows in Renminbi cross-border interbank financing. Domestic banks should establish an internal early warning mechanism, and when the net outflow of Renminbi cross-border interbank financing reaches 80% of the limit, they should issue early warning alerts to the relevant business departments. 6. The upper limit of net outflows in Renminbi cross-border interbank financing is determined based on factors such as the capital level and financial strength of domestic banks, reflecting the principle of macro-prudence. For domestic Chinese-funded banks, the upper limit of net outflows in Renminbi cross-border interbank financing = net amount of Tier 1 capital cross-border business adjustment factor macro-prudential adjustment factor. For domestic foreign-owned and Sino-foreign joint venture banks, the upper limit of net outflows in Renminbi cross-border interbank financing = net amount of Tier 1 capital or Renminbi deposits at the end of the previous year cross-border business adjustment factor macro-prudential adjustment factor, whichever is higher. For foreign bank branches in China, the upper limit of net outflows in Renminbi cross-border interbank financing = operating capital or Renminbi deposits at the end of the previous year cross-border business adjustment factor macro-prudential adjustment factor, whichever is higher. The net amount of Tier 1 capital of domestic Chinese-funded banks, operating capital of foreign bank branches in China, and other financial reports audited at the end of the previous year shall prevail. The initial values of cross-border business adjustment factors and macro-prudential adjustment factors are shown in Appendix 1. 7. The following Renminbi cross-border interbank financing business is not included in the calculation of net outflows: (1) Inflows and outflows of funds based on genuine trade finance backgrounds; (2) Outflows of funds conducted with overseas Renminbi business clearing banks; (3) Business of domestic banks indirectly providing Renminbi loans to overseas enterprises through lending funds to foreign banks; (4) Passive liability; (5) Other businesses recognized by the People's Bank of China. 8. Domestic banks conducting Renminbi cross-border interbank financing business through their Free Trade Account sub-accounting units with foreign institutions shall be handled in accordance with relevant regulations of Free Trade Accounts (Renminbi cross-border interbank financing business conducted using funds disbursed by the head office of a domestic bank shall be included in the calculation of net outflows in Renminbi cross-border interbank financing). 9. The General Branch of the People's Bank of China conducts macro-prudential management on 27 domestic banks (see Appendix 2 for the list). Branches of the People's Bank of China at the level of municipality directly under the Central Government and above plan to manage Renminbi cross-border interbank financing business of other domestic banks according to the principle of territoriality. 10. The People's Bank of China may adjust the cross-border business adjustment factors, macro-prudential adjustment factors, and calculation method of net outflows in Renminbi cross-border interbank financing according to the development of the Renminbi offshore market, the situation of cross-border capital flows, the operation of domestic banks, and other factors, and adjustments may apply to some or all banks as needed. 11. If the net outflows in Renminbi cross-border interbank financing exceed the limit due to changes in Tier 1 capital (operating capital) or Renminbi deposits, or adjustments to cross-border business adjustment factors and macro-prudential adjustment factors, domestic banks shall suspend new outflows in Renminbi cross-border interbank financing business until the net outflows return to within the limit, and existing financing contracts may be held until maturity. 12. Domestic banks conducting Renminbi cross-border interbank financing business shall submit information on Renminbi cross-border interbank financing to the Renminbi Cross-border Payment and Receipt Information Management System (RCPMIS) in accordance with relevant regulations and shall be summarized by the head office of domestic banks or foreign bank branches in China (domestic managing banks) and report statistics on the previous month's Renminbi cross-border interbank financing transactions, balance changes, and other information to the People's Bank of China within the first 5 working days of each month. 27 domestic banks submit statistical information to the General Branch of the People's Bank of China. Other domestic banks' head offices or foreign bank branches in China (domestic management banks) submit statistical information to the branches of the People's Bank of China at the level of municipality directly under the Central Government and above. All business materials shall be kept for 5 years starting from the end date of the business. 13. Rural financial institutions such as rural commercial banks, rural cooperative banks, rural credit cooperatives, and township banks (excluding primary dealers in the open market of the People's Bank of China) shall not conduct Renminbi cross-border interbank financing outflows, and existing outflows shall naturally expire. 14. The General Branch of the People's Bank of China and branches at the level of municipality directly under the Central Government and above shall conduct off-site verification and on-site inspections of domestic banks conducting Renminbi cross-border interbank financing in accordance with their responsibilities, according to the law. 15. If domestic banks have any of the following situations, the People's Bank of China may order them to rectify within a time limit and impose penalties according to the "Law of the People's Republic of China on the People's Bank of China" and other laws and regulations: (1) Exceeding the upper limit of net outflows in Renminbi cross-border interbank financing, except for the situations listed in articles 11 and 17 of this notice; (2) Failure to report relevant information to the Renminbi Cross-border Payment and Receipt Information Management System (RCPMIS) and the People's Bank of China as required; (3) Other violations of this notice. 16. Financial institutions in the Hong Kong Special Administrative Region, Macao Special Administrative Region, and Taiwan region that are set up by bank institutions in mainland China for conducting Renminbi cross-border interbank financing business shall be subject to this notice. 17. This notice shall be implemented from the date of issuance. On the day of implementation of this notice, domestic banks with outstanding Renminbi cross-border interbank financing business exceeding the limit of net outflows shall suspend new outflows in Renminbi cross-border interbank financing business from the next day until the net outflows return within the limit, and existing outflows shall naturally expire. Article 6 of the "Notice of the People's Bank of China on Simplifying the Process of Cross-border Renminbi Business and Improving Relevant Policies" (Yinfa [2013] No. 168) on the maximum ratio of Renminbi account financing is hereby repealed. Source: People's Bank of China OfficialWebsite; GMTEight Editorial: Chen Xiaoyi.