Interim measures for the management of working capital loans

    (February 12, 2010 China's Banking Regulatory Commission [2010] published as of the date of promulgation, 1th) Chapter I General provisions

    First to standardize the working capital loan business of banking institutions, strengthen prudent management of liquidity loans, promoting healthy development of working capital loan business, according to the People's Republic of China Banking Regulatory Act and the People's Republic of China commercial bank law and other relevant laws and regulations, these measures are formulated.

    Article People's Republic of China territory by the China Banking Regulatory Commission approved the establishment of banking institutions (hereinafter lender) operating working capital loan business, should comply with these measures.

    Article working capital loans mentioned in these measures refers to the lender to companies (it) legal persons or other organizations can act as borrower prescribed by the State paid for daily production turnover of foreign currency loans of the borrower.

    Fourth working capital loan on a business loan, law compliance should be followed and prudent management, the principle of equality, voluntariness and fair and honest.

    Fifth lenders should improve internal control mechanisms, management of the lending process, a comprehensive understanding of customer information, establish a liquidity risk management system and an effective post checks and balances, loan administration responsibilities to specific sectors and positions of each link, and the establishment of the post of assessment and accountability mechanisms.

    Sixth article should be a reasonable measure of the lender to the borrower working capital needs, carefully to determine the total amount of liquidity credit of the borrower and the loan amount, shall not exceed the actual needs of the borrower liquidity loans.

    The scale of production and management should be based on the borrower by the lender and period features, setting business type and duration of working capital loans in order to meet the needs of production and operation funds of the borrower, to achieve effective control of loan capital returns.

    Article seventh lender loans should be included for both the borrower and the unified credit management group clients, and by region, sector, loan and other dimensions to establish risk limits management system.

    Article eighth lender shall, in accordance with the economic situation, trade rules and the borrower's credit needs effectively, rationally determine the internal performance indicator, shall make irrational lending indicators may not be vicious competition and lending aggressively.

    Nineth lenders should be agreed with the borrower clear, legitimate credit purposes.

    Working capital loans must not be used in fixed assets, equity investments, and must not be used against the areas of production, management and use.

    Working capital loans shall not be diverted, the lender shall be supervised in accordance with the contract inspection, the use of working capital loans.

    Tenth in accordance with these measures of China Banking Regulatory Commission to supervise and manage the liquidity loans.

    Chapter receiving and investigating

    11th working capital loans to the application shall meet the following conditions:

    (A) the borrower is established according to law;

    (B) the purpose clear, legitimate;

    (C) the borrower production lawful, compliance;

    (D) the continued viability of the borrower, with legitimate sources of repayment;

    (E) good credit status of the borrower, no significant adverse credit records;

    (Vi) other conditions required by lenders.

    12th of borrowers working capital loan application materials and specific content requirements and require the borrower to abide by the principles of honesty and trustworthiness, commitment to provide information is true, complete and effective. 13th the lender should take on-site and off-site means performing due diligence, a written report, and responsible for its content authenticity, integrity, and availability.

    Due diligence including, but not limited to, the following:

    (A) the borrower's organizational structure, corporate governance, internal control and legal representatives and the management team of credit conditions;

    (B) the borrower's business, core business, production management, business planning and major investment plans during the loan period and so on;

    (C) the borrower's status;

    (D) the borrower's accounts receivable, accounts payable, inventory control and so the true financial condition;

    (E) the borrower and demand, existing financing of working capital liabilities;

    (F) the related party and connected transactions of the borrower;

    (G) the specific use of the loans and the counterparty funds associated with the loan, and so on;

    (H) the source of repayment, including production and management of cash flow and other lawful sources of income, comprehensive income, etc;

    (I) secured loans also need investigation arrived (mass) brought property ownership, the value and ease of realisation, or surety guarantees qualified and capable, and so on.

    Chapter III risk assessment and approval

    14th lenders should establish and improve the mechanisms of risk assessment, implementation of specific departments and positions of responsibility, a comprehensive review of risk factors for working capital loans.

    15th lender shall establish and perfect an internal rating system, using scientific and rational methods of rating and credit, assess customer credit rating, establishing customer credit records.

    16th according to the borrower by the lender business, business features and accounts receivable, inventory, accounts payable, financial cycle elements measured their working capital needs (measurement reference annex), considering the borrower's cash flow, liabilities, repayment abilities, factors such as security, determines the loan structure, including amount, term, interest rates, collateral and repayment options.

    17th the lender shall according to the principle of separation, classification approval loan, establish a standard of working capital loan review policies and procedures to ensure independence of the risk assessment and credit approval. The lender shall establish an internal examination and approval authority and authorization mechanism.

    Approving officers should be authorized within the prescribed processes approval loan, not ultra vires approval.

    The fourth chapter contracts

    18th loan people sing with borrowers and other relevant parties to enter into a written contract and other related agreements, need of security should also sign a guaranteed contract.

    19th the lender should loan contract expressly agreed with the borrower liquidity loan amount, term and interest rate, use, payment and repayment terms.

    20th payment terms referred to in the preceding article, including, but not limited to, the following:

    (A) the loan payment amount to be paid and the lender agent standards;

    (B) the conditions of payment change and trigger changes;

    (C) loan payment restrictions, prohibited acts;

    (D) the borrower loan funds with records and information to be provided in a timely manner.

    21st lender borrowers should be specified in the loan contract commitment to the following:

    (A) to provide lenders with true, complete, valid material;

    (B) meet the lenders loan payment management, credit management and related checks;

    (C) engage in overseas investment, a substantial increase in debt financing, as well as merger, Division, transfer of shares prior to important matters such as the consent of the lender;

    (D) the lender to recover from the early withdrawal of funds according to the borrower a loan;

    (E) matters affecting the solvency of significant adverse inform borrowers.

    22nd the lender should be specified in the loan contract with the borrower, when one of the following occurs, the borrower shall bear the liability for breach of the measures taken and the lender may:

    (A) do not use loans as agreed;

    (B) not complying with the agreement to loan funds;

    (C) non-compliance with commitments;

    (Iv) breaking the agreed financial indicators;

    (E) a major crossover event of default;

    (F) violations of other circumstances as stipulated in the loan contract.

    Fifth chapter issuance and payment

    23rd lenders should set up independent departments or positions of responsibility, is responsible for working capital loans and payment.

    24th the lender should a borrower before the loan withdrawal stipulated in the contract conditions are met and in accordance with the contract by lender Trustees paid or independent of the borrower to pay the way for loan funds to pay for management and control, supervision and loan funds according to the agreed use.

    Entrusted by the lender to pay means according to the borrower by the lender's money withdrawal application and paying delegates will loans paid by the borrower's account to borrowers who meet the stipulation of the contract transactions.

    Autonomy refers to the lender to pay the borrower according to the borrower's loan funds withdrawal request will be issued until after the borrower's account, paid by the borrowers own borrower transaction objects to conform to the contract stipulation.

    25th borrowers should be based on the borrower's industry characteristics, scale of operation, management, factors such as credit and loan business, reasonable assumption loan payment and entrusted with the amount to be paid by the lender standards.

    Article 26th working capital loans with the following circumstances should, in principle, entrusted with the payment by the lender:

    (A) new credit business relationship with the borrower and the credit status of the borrower;

    (B) the object is clear and upfront payment paid in amount;

    (C) the lender found in other circumstances. 27th trustee paid by lender, the lender should be based on the agreed loan, audit the borrower to provide payments in the payment application object information such as amount, payment is consistent with the corresponding business contracts and other documents.

    After approval, the lender loans by borrower's account should be paid to the borrower's transaction object.

    28th independent payment by the borrower, the lender should loan contracts require the borrower summary reporting loan payments on a regular basis, and through accounts analysis, document examination or investigation and verification by way of loan payment in conformity with the agreed purpose.

    29th loan disbursement process, reduced credit status of the borrower, the main business profitability is not strong, loan capital anomalies occur, lenders and borrowers should be consulted for additional loans issued and the payment terms, or under contract to change loan payment, stops the release of loan funds, and paid.

    The sixth chapter post-loan management

    Article 30th lender loan disbursement of funds management should be strengthened, according to industry and operational characteristics of the borrower, through regular and non-regular on-site examination and off-site monitoring, analysis of borrower's business, financial, credit, payments, warranties and financing volume and channel changing conditions, to master a variety of risk factors affecting the debt-servicing ability of the borrower.

    31st the lender should be agreed in the loan contract, require the borrower to assign special collection account and the timely provision of funds into and out of the funds in the account.

    According to the credit status of the borrower, lender financing, consultation with the borrower account management agreement signed, clearly agreed to the withdrawal of funds in and out of the specified account management.

    Lenders should focus on the large and abnormal capital inflows and outflows, strengthening the monitoring of capital collection account.

    32nd dynamic attention should the borrower by the lender management, administration, financial and capital flow are important warning signs, according to the contract, to take timely advance loan, additional guarantees effective precaution measures, such as loan risk.

    Article 33rd lenders should assess the loan, amount, duration and degree of match business conditions, repayment ability of the borrower, as a basis for subsequent cooperation with the borrower and, if necessary, adjust the policy and content of the cooperation with the borrower.

    Article 34th lender shall, in accordance with laws and regulations and agreed in the loan contract, participation in the borrower's large finance, asset sales and merger, Division or joint-stock reform, bankruptcy and liquidation activities such as maintenance claims of the lender.

    35th working capital loans need to be extended, the lender should loan the assets conversion cycle change reasons and practical needs, decide whether extension and reasonable loan extended term, strengthen the management of credits that are being rolled over. 36th working capital loans of poor form, the lender should be dedicated to managing and develop recovery solutions in a timely manner.

    Borrowers unable to repay the loan principal and interest for temporary operational difficulties, the lender may consult restructuring.

    37th cannot recover bad loans after the lender in accordance with the relevant provisions to write off the loans, should continue to be recourse to the debtor, or for market-oriented disposal.

    The seventh chapter legal liability Article 38th in violation of these regulations to require the working capital loan on a business loan, the China Banking Regulatory Commission shall be ordered to correct within.

    Lenders, one of the following circumstances, China Banking Regulatory Commission, may be taken as the People's Republic of China banking supervision law of the 37th article of the regulation:

    (A) the working capital loans business process is flawed;

    (B) loan administration responsibilities to the links is not sector-specific and posts;

    (C) loan due diligence of the investigation, risk assessment, post-lending management;

    (D) the borrower acts in violation of the contract should be found and not found, or is found but did not take effective measures in a timely manner.

    39th lender has any of the following circumstances, measures of China Banking Regulatory Commission in addition to the article 38th regulatory measures, also under the People's Republic of China Banking Regulatory Act, 46th, 48th on the punishment:

    (A) to reduce credit terms or exceeded the actual financing needs of the borrower loan;

    (B) the loan contract signed in accordance with this regulation;

    (C) complicity in illegal loans and borrowers;

    (D) allowing borrowers working capital loans for fixed-asset investment, equity investments as well as against the areas of production, management and use;

    (E) loans beyond or disguised beyond permissions;

    (Vi) is not carried out according to the way of loan funds to pay for management and control;

    (G) serious violations of the prudential rules in other circumstances as provided herein.

    The eighth chapter supplementary articles

    40th lenders should be based on the implementation of these measures, formulate working capital loans management rules and procedures.

    41st article explaining these measures by the China Banking Regulatory Commission.

    42nd purposes herein from the date of publication.

    Annex: estimates of the demand for working capital loans refer to the attached: estimation of demand for working capital loans reference Should demand for working capital loans based on the borrower's daily production management required working capital balance with existing liquidity (the liquidity gap). In General, the key factors affecting the liquidity needs for the inventory (raw materials, semi-finished products and finished products), cash, accounts receivable and accounts payable. Meanwhile, also by borrower industry, business size, stage of development, important factors such as the impact on the status of negotiations.

    Banking financial institutions according to the borrower's current financial reporting and business development, measure by its demand for working capital loans:

    , Estimating amount of borrowers working capital Factors affecting the volume of borrowers working capital includes cash, inventory, accounts receivable, accounts payable, accounts payable, accounts payable, advance payment received in advance. Investigation on the basis of forecast cash flow time, reasonably estimated amount of borrowers working capital.

    In the actual calculation of borrowers working capital needs may refer to the following formula:

    Annual sales income on amount of working capital = x (1-year return on sales) x (1+ projected sales revenue growth) number/operating cash flow

    Of which: working capital turnover =360/(+ the number of days ' sales in inventory turnover days accounts receivable-accounts payable turnover days + accounts payable turnover days-ar turnover days in advance)

    Days of turnover of =360/turns

    Receivables turnover = sales/average accounts receivable balance

    AR ar turnover = sales/average balance

    Inventory turnover = cost of goods sold/average inventory

    Prepaid accounts payable turnover = cost of goods sold/average prepayment balance

    Accounts payable turnover = cost of goods sold/average accounts payable balance

    Second, estimates the new line of working capital loans

    Estimated working capital demand after deducting the borrower of the borrower's own funds, the existing working capital loans and other financing, you can estimate the added liquidity loans.

    New liquidity credit = working capital-the borrower's own funds-the existing working capital loan-other sources of working capital

    Third, the need to take into account the other factors

    (A) of the respective banking institutions should be based on the actual situation and future developments (such as industry, size and stage of development of the borrower, the status of negotiations) were reasonably predict borrower accounts receivable, inventory and accounts payable turnover days, will also be given a certain degree of risk.

    (B) the associated group customers, liquidity in the consolidated financial statements can be used to estimate the loan amount in principle included in the consolidated financial statements of the member enterprises working capital loans cannot exceed estimates.

    (C) on small business financing, purchase order financing, rent in advance or temporary large debt financing, authenticity in transactions on the basis of ensuring effective use and control back to cases, determined according to the actual demand of liquidity facility. (D) the borrower for seasonal production, calculated on period of continuous production cycles per year estimated liquidity needs, loan period shall be determined according to the payment cycle is reasonable.