Two Departments Unify RMB and Foreign Currency Overseas Lending Management to Facilitate Cross-Border Financing for Enterprises

Securities Times Reporter He Jueyuan

To enhance the level of capital account openness and meet the reasonable needs of enterprises for cross-border operational funds, the People’s Bank of China and the State Administration of Foreign Exchange jointly issued the “Notice on Printing and Distributing the Measures for the Administration of Overseas Lending by Domestic Enterprises” (hereinafter referred to as the “Notice”) on March 20, which will be implemented starting April 20. The “Notice” incorporates domestic enterprises’ RMB and foreign currency overseas lending into unified management, includes overseas lending by domestic enterprises into macroprudential management, and overall raises the upper limit of overseas lending balances to further support and regulate domestic enterprises’ overseas lending activities.

The current policies on RMB and foreign currency overseas lending were introduced earlier and differ in management requirements regarding sources of funds, loan terms, and extensions. To better meet the genuine and reasonable financing needs of “going global” enterprises, the two departments have unified and improved the policies on foreign currency and RMB overseas lending, creating a stable and predictable policy environment for cross-border financing.

Following the principle of “same business, same rules,” the “Notice” consolidates the management of RMB and foreign currency overseas lending by domestic enterprises, facilitating enterprises to reasonably conduct overseas lending based on their production and operational financing needs, and reducing financing and management costs.

The “Notice” incorporates overseas lending by domestic enterprises into the macroprudential management framework, clarifies that the balance of overseas lending by domestic enterprises is linked to their equity, and supports enterprises in applying for overseas lending within the set balance limits.

To prioritize the domestic currency, the “Notice” explicitly sets a currency conversion factor and encourages the preferential use of RMB for overseas lending. To better meet enterprises’ cross-border operational fund needs, the macroprudential adjustment factor for overseas lending by domestic enterprises has been raised from 0.5 to 0.6, and the overall upper limit of overseas lending balances has been increased. The “Notice” also states that the two departments may adjust the macroprudential adjustment factor and the currency conversion factor in a timely manner based on the international balance of payments and macroeconomic regulation requirements to maintain orderly cross-border capital flows.

The “Notice” reserves a transition period for the implementation of the document, facilitating banks and enterprises to connect existing and new business operations. The two departments will continue to respond promptly to market concerns through policy Q&A and optimized business guidance, making it easier for banks and enterprises to handle related transactions.