贷款通则 People's Bank of China, Lending General Provisions

贷款通则 People's Bank of China, Lending General Provisions
中国人民银行令[1996]年2号

颁布日期：19960628 实施日期：19960801 颁布单位：中国人民银行

PART ONE : GENERAL PROVISIONS
Article 1　These General Provisions are formulated in accordance with the PRC, People's Bank of China Law and the PRC, Commercial Banking Law and other relevant laws and regulations in order to regulate lending activities, safeguard the lawful rights and interests of lenders and borrowers, guarantee the safety of credit loan assets, enhance the overall benefit of loan usage and promote the continued development of the socialist economy.
Article 2　The term "lenders" in these General Provisions shall refer to Chinese-invested financial organizations engaged in the lending business that were lawfully established inside the People's Republic of China.
The term "borrowers" in these General Provisions shall refer to legal persons, other economic organizations, individual industrialists or merchants or natural persons that obtain loans from a Chinese-invested financial organization engaged in the lending business.
The term "loans" in these General Provisions shall refer to monetary funds that a lender provides to a borrower and the principal of which is to be repaid, and interest on which is to be repaid at an agreed rate and within an agreed time limit.
The term "loan currency" in these General Provisions shall include Renminbi and foreign currency.
Article 3　The granting and use of a loan shall conform to the laws and administrative regulations of the State and the administrative rules and regulations promulgated by the People's Bank of China, and shall respect the principles of beneficiality, security and liquidity.
Article 4　Lending and borrowing activities between a borrower and a lender shall abide by the principle of equality, voluntariness, fairness and honesty and trustworthiness.
Article 5　In the development of lending business, lenders shall abide by the principle of fair competition and close co-operation, and may not engage in unfair competition.
Article 6　The People's Bank of China and its branches shall be the regulatory authorities for the implementation of the Lending General Provisions.
PART TWO　TYPES OF LOANS
Article 7　Loans for one's own account, entrusted loans and specially designated loans:
"Loans for one's own account" shall refer to loans granted on one's own initiative using funds raised by lawful means, the risk of which shall be borne by the lender, and of which the principal and interest shall be collected by the lender.
"Entrusted loans" shall refer to loans for which the funds are provided by an entrusting party such as a government department, a unit of an enterprise or institution, or an individual, of which the use is supervised and the recovery assisted by the lender (being the entrusted

party) in accordance with the loan beneficiary, purpose, amount, term, interest rate, etc. determined by the entrusting party. The lender (being the entrusted party) receives only a handling fee but does not bear the loan risk.
"Specially designated loans" shall refer to loans which a wholly State-owned commercial bank is ordered to grant upon approval by the State Council, and after appropriate remedial measures are adopted to cover losses that may arise from such a loan.
Article 8　Short-term, medium-term and long-term loans:
"Short-term loan" shall refer to loan with a term of one year or less (including one year).
"Medium-term loan" shall refer to a loan with a term of over one year (not including one year) and not more than five years (including five years).
"Long-term loan" shall refer to a loan with a term of over five years (not including five years).
Article 9　Fiduciary loans, secured loans and discounting of negotiable instruments:
"Fiduciary loan" shall refer to a loan granted on the reputation of the borrower.
"Secured loan" shall refer to a guaranteed loan, mortgage loan or pledge loan.
"Guaranteed loan" shall refer to a loan granted under the condition that a third party undertakes to bear ordinary or joint and several guarantee liability as agreed, in accordance with the forms of guarantee stipulated in the PRC, Security Law, if the borrower fails to repay the loan.
"Mortgage loan" shall refer to a loan granted against the property of the borrower or a third party as the mortgaged property, in accordance with the forms of mortgage stipulated in the PRC, Security Law.
"Pledge loan" shall refer to a loan granted against movable property or a right of the borrower or a third party as a pledged item in accordance with the forms of pledge stipulated in the PRC, Security Law.
"Discounting of negotiable instrument" shall refer to a loan granted through the purchase by the lender of a commercial negotiable instrument before maturity from the borrower.
Article 10　Except in the case of an entrusted loan, where a lender grants a loan, the borrower shall provide a guarantee. The lender shall conduct a strict examination into the repayment capability of the guarantor, and the ownership and value of a mortgaged property or pledged item, as well as the feasibility of realizing the mortgage rights or pledging rights.
Where, upon loan examination and assessment, the good creditworthiness and actual capability to repay the loan of the borrower is appraised and confirmed, it is permissible for a guarantee not to be provided.
PART THREE　TERM AND INTEREST RATE OF A LOAN
Article 11　Term of a loan:
The term of a loan shall be determined after consultations between the lender and the borrower according to the borrower's production or business cycle and repayment capability, and the lender's ability to provide funds, and shall be

stated clearly in the lending contract.
The term of a loan for one's own account shall generally not exceed ten years. Loans with a term exceeding 10 years shall be reported to the People's Bank of China for the record.
The term of discount for the discounting of negotiable instruments shall not exceed six months. The term of discount shall be from the date of discounting to the date of maturity of the negotiable instruments.
Article 12　Extension of the term of a loan:
Where a loan cannot be repaid on time, the borrower shall, before the date of maturity of the loan, apply to the lender for an extension of the term of such loan. The lender shall decide whether or not to extend the term. Where an application is made for extension of the term of a guaranteed loan, mortgage loan or pledge loan, the guarantor, mortgagor or pledgor shall additionally issue written proof of his or its consent. Where arrangements have already been made, matters shall be implemented in accordance with such arrangements.
Extensions of the term of a short-term loan may not cumulatively exceed the original term of the loan; extensions of the term of a medium-term loan may not cumulatively exceed half of the original term of the loan; and extensions of the term of a long-term loan may not cumulatively exceed three years, unless regulations of the State provide otherwise. Where a borrower does not apply for an extension, or the application for an extension is not approved, the loan shall become an overdue loan account as of the day after the date of maturity of the loan.
Article 13　Determination of interest on a loan
The lender shall confirm the interest rate for each loan in accordance with the maximum and minimum lending interest rates specified by the People's Bank of China, and specify the rate in the loan contract.
Article 14　Calculation and collection of interest on a loan
The lender and the borrower shall calculate and collect or pay interest on schedule in accordance with the lending contract and regulations of the People's Bank of China regarding the calculation of interest.
If the extended and the original terms, when added together, fall within a new interest rate bracket, lending interest from the date of the extension shall be calculated and collected in accordance with the new interest rate bracket.
Penalty interest shall be calculated and collected on overdue loans in accordance with regulations.
Article 15　Subsidized interest for loans:
Based on State policy, relevant departments may subsidize interest for loans, in order to promote the economic development of certain industries or regions.
A bank that undertakes loans for which relevant departments subsidize interest, shall investigate and grant such loans on their own initiative, and shall strictly administrate such loans in accordance with relevant regulations of these General Provisions.
Article

16　Suspension, reduction or deferment of, or exemption from, loan interest:
Except where decided by the State Council, no work units or individuals shall have the right to decide on a suspension, reduction or deferment of, or exemption from, interest. Lenders shall specifically handle the suspension, reduction or deferment of, or exemption from, interest based on the decision of the State Council, in accordance with their limits of authority and responsibility.
PART FOUR　BORROWERS
Article 17　A borrower shall be an enterprise legal person, institution legal person or other economic organization, individual industrialist or merchant approved and registered by the administrative authorities for the administration of industry and commerce (or the authorities-in-charge), or a natural person with full capacity for civil acts and a PRC national.
A borrower applying for a loan shall satisfy such basic conditions as having a market for his or its products, having profitable production or business operations, not wrongfully seizing or misappropriating loan funds, and being scrupulously creditworthy, and shall comply with the following requirements:
1. To be able to pay off the principal and interest according to schedule, and to have already paid off the interest on previous loans and due loans; where such payments have not been paid off, to have made a repayment plan approved by the lender;
2. To have gone through the annual inspection by the departments for industry and commerce, except in the case of a natural person or an institution legal person that is not required to undergo approval and registration by the departments for industry and commerce;
3. To have already opened a basic account or an ordinary savings account;
4. That, in the case of a limited liability company or company limited by shares, the cumulative amount of its equity investment in outside shares does not exceed 50 per cent of its total net assets, except where otherwise stipulated by the State Council;
5. That the debt-equity ratio of the borrower conforms with the requirements of the lender; and
6. Where an application for a medium- or long-term loan is made, the ratio of the ownership interest of the enterprise legal person in a new construction project to the total investment necessary for the project is not less than the capital fund ratio for investment projects stipulated by the State.
Article 18　Rights of a borrower:
1. A borrower may apply for a loan on his or its own initiative from the management organization of his or its loan organizer or other bank and obtain a loan according to the conditions;
2. A borrower shall have the right to draw down and use the entire loan as agreed in the contract;
3. A borrower shall have the right to reject attached conditions not included in the loan contract;
4. A borrower shall have the right to refer and report relevant detai

ls to the lender's superior authorities and to the People's Bank of China; and
5. Upon soliciting and obtaining the consent of the lender, a borrower shall have the right to transfer the debt to a third party.
Article 19　Obligations of a borrower:
1. A borrower shall provide such true information as the lender may require (with the exception of such information that may not be provided by law), provide to the lender true details of all banks with which he or it has opened accounts, all account numbers and all deposit balances, and co-operate with the lender in investigation, examination and inspection;
2. A borrower shall be subject to the lender's supervision of his or its use of credit funds and of the relevant production, operation and financial activities;
3. A borrower shall use the loan as agreed upon in the loan contract;
4. A borrower shall promptly pay off the principal of the loan together with the interest thereon, as agreed in the loan contract;
5. A borrower shall obtain the lender's consent if the borrower wishes to assign all or part of the debt to a third party; and
6. A borrower shall notify the lender in a timely manner of any details that may jeopardize the security of the lender's claim, and at the same time shall take measures to preserve the claim.
Article 20　Restrictions on a borrower:
1. A borrower may not obtain loans from two or more branches of the same lender at the same level and in the same jurisdiction;
2. A borrower may not provide false details to, or withhold important details, from the lender concerning balance sheets, profit and loss accounts, etc.;
3. Except where otherwise stipulated by the State, a borrower may not use the loan to engage in equity investments;
4. A borrower may not use the loan to engage in speculation in areas such as securities or futures;
5. A borrower may not use the loan to engage in property business, except where the borrower has lawfully obtained qualifications to engage in property business. Borrowers that have obtained qualifications to engage in property business may not use the loan to engage in property speculation;
6. A borrower may not divert loan funds in order to seek illegal profit by on-lending such loan;
7. A borrower may not use foreign currency loans in violation of State administration of foreign exchange provisions; and
8. A borrower may not use deceptive practices to fraudulently obtain a loan.
PART FIVE　LENDERS
Article 21　Lenders must be approved by the People's Bank of China to engage in lending business, hold a Financial Institution Legal Person Licence or a Financial Institution Business Licence issued by the People's Bank of China, and be approved and registered by the administrative departments for the administration of industry and commerce.
Article 22　Rights of a lender:
According to the conditions of the

loan and on the basis of taking the initiative to undertake examination and checking of the lending process, and to decide the loan, a lender has the right to refuse the order for a loan or an order to provide a guarantee made by any unit or individual, except where the loan is a specially-designated loan approved by the State Council.
1. A lender has the right to require the borrower to provide information relevant to the loan;
2. A lender has the right to decide such matters as whether or not to provide a loan, the loan amount, loan term and loan interest, on the basis of the conditions of the borrower;
3. A lender has the right to know the production business activities and financial activities of the borrower;
4. The lender has the right to collect the principal of and interest on the loan by transferring the same from the borrower's account as agreed in the contract;
5. Where the borrower is unable to perform his or its obligations as stipulated in the loan contract, the lender has the right to require the borrower to prepay the loan or to stop paying to the borrower the part of the loan which he or it has not yet used, as agreed in the contract; and
6. Where a loan is about to sustain a loss or is already sustaining a loss, the lender may adopt measures to avoid loan losses, based on the provisions in the contract.
Article 23　Obligations of a lender
1. A lender shall publicly announce information on the types, terms and interest rates of loans that he or it engages in, and provide advice to borrowers;
2. A lender shall publicly disclose the particulars of an applicant's creditworthiness to be examined in connection with the granting of a loan, and the conditions for granting a loan;
3. A lender shall consider a borrower's application for a loan and respond promptly as to whether or not the loan will be granted. A response shall be given within one month for short-term loans, and within 6 months for medium- and long-term loans, except where otherwise stipulated by the State; and
4. A lender shall maintain the confidentiality of details of the debts, finances, production and business of borrowers, except in the cases of inquiries made according to the law.
Article 24　Restrictions on a lender:
1. When providing loans, relevant provisions of Article 39, regarding the management of debt-equity ratios, and the provisions of Article 40, regarding the prohibition on granting fiduciary loans to connected parties and the prohibition on granting secured loans to connected parties on conditions that are more preferential than those for granting the same type of loan to other borrowers, of the PRC, Commercial Banking Law, must be strictly implemented.
2. No loans shall be granted to any borrower that:
(1) does not satisfy the qualifications and conditions stipulated in Article 17 of Part 4 of these General Provisions;
(2) produces, deals

or invests in a product or project that is expressly prohibited by the State;
(3) violates State provisions on the administration of foreign exchange;
(4) has not obtained approval documents for a construction project that should be reported to relevant departments for approval in accordance with State provisions;
(5) has not obtained the permission of an environmental protection department for a production, business or investment project;
(6) in the process of a system change, such as implementing contracting, leasing, joint venture, merger (merger by takeover), co-operation, division, assignment of property rights for compensation, or restructure of a share system enterprise, has not paid off his or its pre-existing loan debts, fulfilled his or its pre-existing loan debts or provided appropriate security; or
(7) commits other serious illegal business activities.
3. No foreign currency loans may be granted to natural persons without the approval of the People's Bank of China;
4. No fees other than interest that is calculated and collected as stipulated by the People's Bank of China, may be collected on loans for one's own account and specially designated loans; no fees other than handling fees that are calculated and collected as stipulated by the People's Bank of China, may be collected on entrusted loans;
5. Funds shall not be advanced to the entrusting party, except where otherwise stipulated by the State; and
6. The lender shall strictly control fiduciary loans and actively promote secured loans.
PART SIX　LENDING PROCEDURES
Article 25　Loan applications:
A borrower in need of a loan shall apply directly to the management organization of his or its banks or the loan organization of another bank.
A borrower shall fill in a "Loan Application" specifying main items such as the loan amount, purpose of the loan, repayment capability and repayment method, and provide the following information:
1. Main details of the borrower and the guarantor;
2. A financial report for the preceding year and a financial report for the period preceding the loan application, ratified and approved by the financial authorities or an accounting (auditing) firm;
3. Details of corrections to the unreasonable use of pre-existing loans;
4. A checklist of mortgaged or pledged property, proof of consent to such mortgages or pledges from the persons having the right to dispose of the property, and relevant documentary proof that the guarantor intends to provide a guarantee;
5. Project proposal and feasibility study report; and
6. Other relevant information that the lender may consider necessary to be provided.
Article 26　Credit rating of a borrower:
The credit rating of a borrower shall be assessed according to factors such as the quality of its leaders, his or its actual financial status, his or its fund portfolio, his or its

history of honouring agreements, his or its business benefits and his or its development prospects. Ratings may be given independently and controlled internally by the lender, or be given by an appraisal organization approved by the authorized departments.
Article 27　Investigation of loans:
After a lender has received an application from a borrower, he or it shall carry out an investigation into the borrower's credit rating, as well as the legality, security, profitability, etc. of the loan, verify the details of the mortgaged or pledged property and guarantor, and assess the level of risks involved in the loan.
Article 28　Examination and approval of loans:
Lenders shall establish a loan administration system in which loan examination is separated from loan approval, and examination and approval is carried out at different levels. The examination personnel shall verify and appraise the information provided by the investigation personnel, re-assess the loan risks, provide suggestions, and in accordance with their stipulated limits of authority, submit the same for approval.
Article 29　Entry into a loan contract:
For all loans, a loan contract shall be entered into between the lender and the borrower. The loan contract shall stipulate the type, purpose, amount of the loan, interest rate on the loan, the lending term, repayment method, rights and obligations of the borrower and lender, liability for breach of contract and other matters that the two parties consider necessary to stipulate.
For a guaranteed loan, the guarantor and the lender shall enter into a guarantee contract, or the guarantor shall make a clear statement in the loan contract regarding the guarantee provisions discussed and unanimously agreed upon with the lender, which shall be sealed with the official seal of the guarantor legal person, and contain the signature and full name of the legal representative of the guarantor or of a representative authorized by him. For a mortgage loan or pledge loan, the mortgagor or pledgor and the lender shall enter into a mortgage or pledge contract, and where such contract is required to be registered, registration shall be handled in accordance with the law.
Article 30　Provision of loans:
The lender shall provide a loan on schedule in accordance with the arrangements of the loan contract. Where the lender fails to provide such loan on schedule in accordance with the contract, he or it shall pay a penalty for breach of contract. Where the borrower does not use the funds in accordance with the arrangements of the loan contract, he or it shall pay a penalty for breach of contract.
Article 31　Inspection after lending:
Upon provision of a loan, the lender shall carry out follow-up investigation and inspection of the borrower's implementation of the loan contract and business situation.
Article 32　Repayment of a loan:
The borrower shall repay the ful

l amount of the principal with the interest thereon on time in accordance with the provisions of the loan contract.
One week prior to the date of maturity of a short-term loan, or one month prior to the date of maturity of a medium- or long-term loan, the lender shall send a notice to the borrower listing the principal to be repaid and interest due. The borrower shall promptly arrange the funds and repayment the principal with the interest thereon on time.
For overdue loans, the lender shall promptly issue a calling-in notice, and complete calling-in work for principal and interest on overdue loans.
For loans that are unable to be repaid in accordance with the term agreed upon in the loan contract, the lender shall add penalty interest in accordance with provisions. Where repayment cannot be made, or repayment of principal and payment of interest arrangements cannot be fulfilled, repayment shall be supervised and urged, or a civil case shall be initiated in accordance with the law.
Where the borrower wishes to repay the loan ahead of the term of such loan, he or it shall consult with the lender.
PART SEVEN　SUPERVISION OF BAD LOANS
Article 33　Lenders shall establish and perfect a system of supervising loan quality, and classify, register, inspect and call in bad loans.
Article 34　"Bad loans" shall refer to dead loans, idle loans and overdue loans.
"Dead loans" shall refer to loans that are classified as bad loans in accordance with relevant provisions of the Ministry of Finance.
"Idle loans" shall refer to loans (excluding dead loans) that, in accordance with relevant provisions of the Ministry of Finance, are overdue (including those that fall due after extension of the term) by exceeding the stipulated time limit and that still are not repaid, or that although overdue or are not overdue because they do not exceed the stipulated time limit but were granted for production or business operations that have been suspended or for a project the construction of which has ceased.
"Overdue loans" shall refer to loans (excluding idle loans and dead loans) that have not been repaid by the date of maturity agreed upon in the loan contract (including those that fall due after extension of the term).
Article 35　Registration of bad loans:
Data on bad loans shall be provided by the accounting and credit departments. The auditing department shall be responsible for verification of the data and, in line with the stipulated limits of its authority, for confirmation of the loans as bad loans. The lender shall fill in and submit a quarterly statement on bad loans. At the same time as the statement is submitted to the superior bank, such statement shall also be submitted to the local branches of the People's Bank of China.
Article 36　Inspection of bad loans:
The dead loans, idle loans and overdue loans of a lender may not exceed the percentages stipulated by the

People's Bank of China. The lender shall give relevant instructions to its branch organizations on the relevant quotas for dead loans, idle loans and overdue loans.
Article 37　Calling in bad loans and writing off dead loans:
The credit department shall be responsible for calling in bad loans and the auditing department shall be responsible for inspection of calling in bad loans. The lender shall make allocations to a reserve for bad debts in accordance with relevant provisions of the State, and shall write off dead loans in accordance with the conditions and procedures for writing off dead loans.
Without the approval of the State Council, a lender may not cancel loans. Except with the approval of the State Council, no work unit or individual may forcibly demand a lender to cancel a loan.
PART EIGHT　RESPONSIBILITY SYSTEM FOR THE ADMINISTRATION OF LOANS
Article 38　Bank presidents (hereafter referring to managers or supervisors) shall be responsible for the administration of loans.
Loans shall be subject to administration at different levels and bank presidents at different levels shall be fully responsible for the granting and recovery of loans within the scope of their authorization. A bank president may authorize a deputy bank president or loan administration department to take responsibility for examining and approving loans. The deputy bank president or responsible person of the loan administration department shall be accountable to the bank president.
Article 39　The organizations of a lender at each level shall establish a Loan Examination Committee (Team) in which the bank president or deputy bank president (hereafter referring to managers or supervisors) and the responsible persons of the relevant departments shall participate, which shall be responsible for the examination of loans.
Article 40　Establishment of separate systems for the examination and approval of loans:
The loan investigation and appraisal personnel shall be responsible for the investigation and appraisal of loans and be liable for erroneous investigation and appraisals. The loan investigation and appraisal personnel shall be responsible for examining loan risks and be liable for mistakes in examination. The loan provision personnel shall be responsible for the inspection and full recovery of loans, and shall be liable for mistakes in inspection and slackness in the full recovery of loans.
Article 41　Establishment of a system for examination and approval of loans at different levels:
Lenders shall determine the limits of the examination and approval authority of their branches at each level in accordance with their business volume, standard of administration and the loan risk factor, and shall report loans beyond their examination and approval authority to a higher level for examination and approval. The branches at each level shall determine the risk factor of each loan in accordance w

ith the circumstances, such as the type of loan, the credit rating of the borrower, the mortgaged property, the pledged item and the guarantor.
Article 42　Establishment and improvement of a system of personal responsibility for credit work:
The loan administration departments at each level shall assign responsibility for detailed management of loans to the departments, positions and individuals, and shall strictly define the duties of the credit personnel at each level.
Article 43　The lender shall establish an in-house credit personnel system at factories for borrowers of large sums of money.
Article 44　Establishment of an auditing system for vacated posts:
When loan administration personnel vacate their original posts, an audit shall be conducted concerning the loan risk situation of all loans granted during such tenure of office and within the limits of authority of such personnel.
PART NINE　ADMINISTRATION OF THE PRESERVATION OF LOANS CLAIMS AND THE REPAYMENT OF LOAN OBLIGATIONS
Article 45　A borrower may not violate the provisions of the law and use a merger, bankruptcy or restructuring of a share system enterprise to channel and evade bank claims and misappropriate credit funds. A lender may not use contracting or leasing arrangements to channel and evade the lender's credit supervision or the obligation to repay the principal and interest thereon of a loan.
Article 46　The lender has the right to participate in the debt restructuring of a borrower in the process of a merger, bankruptcy or restructuring of a share system enterprise, and shall require the borrower to fulfil repayment of loan principal and interest matters.
Article 47　A lender shall require a borrower that is to contract or lease out his or its business to specify fulfilment of repayment liability for the original loan obligation in the contracting or leasing contract.
Article 48　A lender shall require a borrower that is to undergo a share system restructuring to establish a new loan contract to specify the repayment liability for the original loan obligation.
The lender shall require that, the company that results from a borrower who is undergoing a complete share system restructuring, once restructured, becomes fully liable for the owed obligation. For a borrower undergoing partial share system restructuring, the lender shall require the share structure company that results from the restructuring to bear liability for the original loan based on the proportion of the capital funds or assets of the borrower that such enterprise holds.
Article 49　A lender shall require a borrower that is to engage in a joint operation that results in the formation of a new enterprise legal person, to transfer fulfilment of the loan obligation to the new enterprise legal person in proportion to the capital funds or assets of the borrower to be held by such enterprise.
Article 50　A lender s

hall require a borrower that is to be merged (merged by takeover) to repay the loan obligation or provide corresponding security before merger (merger by takeover).
If a borrower does not repay the loan obligation or provide corresponding security, the lender shall require the enterprise merging (merging by takeover) or the new enterprise arising from a merger to bear responsibility for repayment of the loan owed by the original borrower, and shall establish a relevant new contract or agreement.
Article 51　A lender shall require a borrower that is to set up an equity (co-operative) joint venture with a foreign partner to continue to be liable for repaying the loan obligations taken out prior to the establishment of such equity (co-operative) joint venture, and shall require all proceeds obtained to be applied first to the repayment of the loan. A borrower that wishes to use property already mortgaged or pledged for a loan to set up an equity (co-operative) joint venture with a foreign partner must seek the consent of the lender.
Article 52　A lender shall require a borrower that is to undergo demerger to repay the loan obligation or provide corresponding security before demerger.
Where a borrower does not repay the loan obligation or provide corresponding security, the lender shall require each enterprise resulting from the demerger to be liable for repayment of the loan owed by the original borrower in proportion to the capital or assets held at the time of demerger, or as agreed. Where a borrower establishes a subsidiary, the lender shall require such subsidiary to bear and repay the corresponding loan obligation of the parent company in proportion to the capital or assets received.
Article 53　A lender shall require a borrower that is to assign property rights for compensation or apply for dissolution to fulfil repayment of loan obligations prior to assignment of property rights for compensation or dissolution.
Article 54　A lender shall participate, in accordance with relevant laws, in the determination of a bankrupt borrower's property and the disposal of his or its claims and obligations. For loan claims which a bankrupt borrower has already secured with a mortgage or pledge of property or otherwise, the lender shall enjoy receipt of repayment on a priority basis, in accordance with the law. Repayment of loan claims not secured by property shall be obtained in accordance with the statutory procedures and ratios.
PART TEN　SPECIAL PROVISIONS FOR THE ADMINISTRATION OF LOANS
Article 55　Establishment of loan organizers systems:
A borrower shall establish a loan organizer relationship with the lender with which he or it has opened his or its basic account, in accordance with the provisions of the People's Bank of China.
Where a borrower is to undergo a major economic activity involving the usage or security of credit funds, such as enterprise demerger, restructuring of

a share system enterprise or construction of a major project, such borrower shall seek the opinion of his or its loan organizer in advance. One borrower may only have one loan organizer, and the loan organizer shall make alterations according to alterations made in a borrower's basic account.
A loan organizer shall not guarantee capital, but shall provide loans to a borrower in a planned manner in accordance with regulations, and provide necessary financial services such as information, advice and agency to the borrower.
Loan organizer systems and implementing procedures shall be stipulated elsewhere by the People's Bank of China.
Article 56　For syndicated loans, one lender shall be designated as the lead bank, and a syndicated loan agreement specifying the rights and obligations of each lender shall be entered into. The members of the bank syndicate shall jointly assess and examine the loan project. The lead bank shall supervise the repayment of the loan according to the specified ratio. Administration procedures for syndicated loans shall be separately stipulated by the People's Bank of China.
Article 57　Management of specially designated loans:
Wholly State-owned commercial banks shall grant and manage specially designated loans in accordance with the provisions of the State Council.
Administration procedures for specially designated loans shall be separately stipulated.
Article 58　The type, subject and scope of loans by non-banking financial institutions shall comply with the provisions of the People's Bank of China.
Article 59　If a lender grants a loan to another locality, or accepts deposits from another locality, it shall report such matter to the local branch of the People's Bank of China for the record.
Article 60　Credit funds may not be used for financial expenditures.
Article 61　No administrative authorities, units of enterprises or institutions at any level, economic co-operative organizations such as supply and sales co-operatives, rural co-operative foundations or other foundations may engage in financial business, such as deposit or loan business. No financing business involving lending or borrowing, or lending and borrowing in a disguised form, may be handled between enterprises in violation of State provisions.
PART ELEVEN　PENALTIES
Article 62　Where a lender grants a loan in violation of the provisions regarding the administration of debt-equity ratios, the People's Bank of China shall order rectification and impose a fine, in accordance with Article 75 of the PRC, Commercial Banking Law. Where there is illegal income, such illegal income shall be confiscated, and disciplinary sanctions shall be imposed on the directly responsible personnel in charge and other directly responsible personnel, in accordance with Article 76 of the PRC, Commercial Banking Law.
Article 63　Where a lender grants fiduciary loans to connected part

ies or grants secured loans to connected parties on conditions that are more preferential that those for granting the same type of loan to other borrowers in violation of provisions, disciplinary sanctions shall be imposed in accordance with Article 74 of the PRC, Commercial Banking Law, and disciplinary sanctions shall be imposed on relevant directly responsible personnel in accordance with Article 76 of the PRC, Commercial Banking Law.
Article 64　Where the personnel of a lender fails to refuse forcible demands by a work unit or individual to grant a loan or provide a guarantee or security, disciplinary penalties shall be imposed in accordance with Article 85 of the PRC, Commercial Banking Law, and where losses are caused, such personnel shall bear corresponding liability for compensation.
Article 65　Where relevant responsible personnel of a lender violate relevant regulations of these General Provisions, disciplinary penalties and fines shall be imposed. In serious cases or in the case of repeat offences, such personnel shall be dismissed from their posts, and their qualifications for such posts shall be cancelled. Where serious economic losses are caused or where the matter constitutes another economic crime, criminal liability shall be pursued in accordance with relevant laws and regulations.
Article 66　Where any of the following circumstances arise with regard to a lender, the People's Bank of China shall order rectification, and where rectification is not made within the specified time, the People's Bank of China may impose a fine of between Rmb 5,000 and Rmb 10,000:
1. Failure to publicly announce the type, term and interest rate of a loan handled by the lender;
2. Failure to publicly disclose the conditions for granting a loan or the particulars required to be examined when a loan is granted; or
3. Failure to reply to a borrower's loan application within the specified time.
Article 67　Where any of the following circumstances arise with regard to a lender, the People's Bank of China shall order rectification. Where there is illegal income, such illegal income shall be confiscated and a fine of between one time and three times the amount of the illegal income shall be imposed. Where there is no illegal income, a fine of between Rmb 50,000 and Rmb 300,000 shall be imposed. Where the matter constitutes a crime, criminal liability shall be pursued in accordance with the law:
1. A lender advances funds for an entrusted loan in violation of provisions;
2. A lender grants a foreign currency loan to a natural person without the approval of the People's Bank of China; or
3. A lender, in violation of the provisions of the People's Bank of China, collects any additional fees other than the interest to be calculated and collected for a loan on one's own account or for a specially designated loan, or collects any additional fees other than the handling fees to be calculated a

nd collected for an entrusted loan.
Article 68　Where any work unit or individual forcibly demands a bank to grant a loan or provide a guarantee or security, the directly responsible personnel in charge, or other directly responsible personnel or individual shall be subject to disciplinary sanctions in accordance with Article 85 of the PRC, Commercial Banking Law. Where economic losses are caused, such personnel shall bear all or part of the compensation liability.
Article 69　Where a borrower uses deceptive practices to fraudulently obtain a loan, and the matter constitutes a crime, a fine shall be imposed and criminal liability shall be pursued in accordance with laws and regulations and with Article 80 of the PRC, Commercial Banking Law.
Article 70　Where a borrower violates the provisions of Article 45 in Part 9 of these General Provisions and deliberately uses such methods as a merger by takeover, bankruptcy or restructuring of a share system enterprise to misappropriate credit funds, such borrower shall bear corresponding liability for compensation and shall be subject to a fine in accordance with relevant laws and regulations. Where major economic losses are caused to the lender, criminal liability shall be pursued against the directly responsible personnel in accordance with relevant laws and regulations.
Where a borrower violates other the provisions of other articles of Part 9 of these General Provisions and causes failure of payment of a loan obligation, the lender shall cease to provide new loan funds and recover loan funds that have already been provided ahead of the term. Where losses are caused to the credit loan assets, the borrower and its personnel-in-charge or other individuals shall bear all or part of the liability for compensation. Before such liability for compensation is fulfilled, no other lenders may grant a loan to such borrower.
Article 71　Where any of the following circumstances arise regarding a borrower, a lender shall charge additional interest on all or part of his or its loan. Where the circumstances are particularly serious, the lender shall stop payment to the borrower of the part of the loan which he or it has not yet used, and recover all or part of the loan ahead of the term:
1. A borrower fails to use the loan in accordance with the purpose specified in the loan contract;
2. A borrower uses the loan to conduct equity investments;
3. A borrower uses the loan to engage in speculation in areas such as securities or futures;
4. A borrower that has not lawfully obtained qualifications to engage in property business uses the loan to engage in property business; or a borrower that has lawfully obtained qualifications to engage in property business uses the loan to engage in property speculation;
5. A borrower does not repay the loan principal with interest thereon in accordance with the provisions of the loan contract; or
6. A borrow

er diverts loan funds in order to seek illegal profit by on-lending.
Article 72　Where any of the following circumstances arise regarding a borrower, the lender shall order rectification. Where the circumstances are particularly serious or rectification is not made within a specified time limit, the lender shall stop payment to the borrower of the part of the loan which he or it has not yet used, and recover all or part of the loan ahead of the term:
1. A borrower provides the lender with false information or withholds major information such as balance sheets, profit and loss accounts, etc.;
2. A borrower fails to provide true information to the lender concerning the banks with which he or it has opened accounts, the account numbers, deposit balances, etc.; and
3. A borrower refuses to be subject to the lender's supervision of his or its use of the credit funds and of relevant production, operation and financial activities.
Article 73　Where administrative authorities, units of enterprises or institutions, share system co-operative economic organizations, supply and sales co-operatives, rural co-operative foundations or other foundations grant loans without authorization, or where enterprises engage in lending and borrowing or lending and borrowing in a disguised form between themselves without authorization, the People's Bank of China shall impose a fine on the lender of between one time and five times the income gained in violation of provisions, and the People's Bank of China shall suppress the activity.
Article 74　Where a party is dissatisfied with a penalty decision of the People's Bank of China, he or it may apply for a review in accordance with the provisions of the People's Bank of China, Administrative Review Procedures (Trial Implementation). During the review period, the original penalty shall continue to be implemented.
PART TWELVE　SUPPLEMENTARY
Article 75　Loan administration procedures for State policy banks, foreign investment financial institutions (including wholly foreign-owned financial institutions, Sino-foreign equity joint venture financial institutions and branches of foreign investment financial institutions) shall be separately stipulated by the People's Bank of China.
Article 76　Administration procedures regarding exterior security for foreign government loans, export credit, subsidized interest loans by foreign businesses or export credit projects, or international commercial loans connected with the above loans shall be separately stipulated by the People's Bank of China.
Article 77　Lenders may formulate implementing rules in accordance with these General Provisions and report the same to the People's Bank of China for the record.
Article 78　From the date on which these General Provisions are implemented, in case of conflict between these General Provisions and any rules and regulations previously formulated by the People's Bank o

f China and lenders, these General Provisions shall prevail.
Article 79　The People's Bank of China shall be responsible for the interpretation of these General Provisions.
Article 80　These General Provisions shall be effective as of 1 August 1996.