China Banking Regulatory Commission (CBRC) is set to revise the Administration Rules on Financial Leasing Company, aiming at rectifying the 12 financial leasing companies and canceling the franchise rights of financing and interbank borrowing and lending to make them return to the main business of financing and leasing sector, an authoritative person disclosed.
The rules will permit the commercial banks registered in China to directly set up financial leasing companies.
This is the first time for supervision department to permit commercial banks to directly set up financial leasing companies since 1997 when commercial banks were required to withdraw from financial leasing companies. Commercial banks are taken as the first choice of the major investor of financial leasing company.
This showed that the supervision department will break the mode of separated operation and separated supervision to push forward the mixed operation in financial sector.
To be specific, commercial banks with total assets of not less than 80 billion yuan (US$10.3 billion) in the latest year can become the major investor of financial leasing company and have 50 per cent of the stake of financial leasing companies. At the same time, large-scale leasing companies, manufacturing enterprises and other financial institutions recognized by CSRC can also be the major investors of financial leasing companies with approval from CBRC.
But, according to the revised rules, only commercial banks are qualified to be the initiators of founding financial leasing companies.
CSRC stipulates that financial leasing companies must focus on major operating business, and are not allowed to engage in stock, high-interest deposits, and other illegal business.
Commercial banks were formerly restricted by the policy to open financing leasing business directly. (Posted 01/16/07)