Table of Contents
Chapter I: General Provisions
Article 1 This Law is enacted for the purposes of strengthening the supervision and administration of the banking industry, regulating supervisory and administrative acts, preventing and mitigating banking risks, protecting the lawful rights and interests of depositors and other customers, and promoting the sound development of the banking industry.
Article 2 The banking supervisory authority under the State Council shall be responsible for the supervision and administration of banking financial institutions and their business activities nationwide. For the purposes of this Law, “banking financial institutions” means financial institutions established within the territory of the People’s Republic of China that accept deposits from the general public, including commercial banks, urban and rural credit cooperatives, policy banks, and other financial institutions. The provisions of this Law shall apply to the supervision and administration of branches of foreign banks established within the territory of China.
Article 3 The objectives of banking supervision and administration shall be to promote the lawful and sound operation of the banking industry and to maintain public confidence in the banking industry. Banking supervision and administration shall protect fair competition in the banking industry and enhance the competitiveness of the banking industry.
Chapter II: Banking Supervisory Authority
Article 4 The banking supervisory authority under the State Council shall perform its supervisory and administrative duties in accordance with law, free from interference by any local people’s government, government department at any level, public organization, or individual.
Article 5 The banking supervisory authority under the State Council shall follow the principles of openness, fairness, and efficiency in performing its supervisory and administrative duties. Banking supervision and administration shall be carried out in accordance with law, and the standards and procedures of supervision and administration shall be open and transparent.
Article 6 The banking supervisory authority under the State Council shall establish a supervisory and administrative information sharing mechanism with the People’s Bank of China, the securities regulatory authority under the State Council, the insurance regulatory authority under the State Council, and other financial regulatory authorities. The banking supervisory authority may establish supervisory cooperation mechanisms with the banking supervisory authorities of other countries or regions to implement cross-border supervision and administration.
Chapter III: Supervisory and Administrative Measures
Article 7 The banking supervisory authority under the State Council shall, in accordance with law, formulate and issue rules and regulatory documents on the supervision and administration of the banking industry. The banking supervisory authority shall examine and approve the establishment, change, and termination of banking financial institutions and their business scope in accordance with law.
Article 8 The banking supervisory authority under the State Council shall implement on-site inspections of banking financial institutions. When conducting on-site inspections, inspectors shall have at least two persons present and shall produce their inspection certificates and inspection notices. Banking financial institutions shall cooperate with the on-site inspections conducted by the banking supervisory authority and shall truthfully provide relevant documents and materials.
Article 9 The banking supervisory authority under the State Council shall implement off-site surveillance of the business activities and risk status of banking financial institutions, establish an information system for the supervision and administration of the banking industry, and conduct analysis and assessment of the risks of banking financial institutions.
Article 10 The banking supervisory authority under the State Council shall establish a rating system and a risk warning mechanism for banking financial institutions, and shall, based on the rating and risk status of banking financial institutions, determine the frequency, scope, and measures of on-site inspections.
Article 11 The banking supervisory authority under the State Council shall establish a system for reporting and handling sudden incidents in the banking industry, and shall, upon discovering a sudden incident that may trigger systemic banking risks, promptly report to the State Council and take appropriate measures.
Article 12 The banking supervisory authority under the State Council may, in accordance with the needs of supervisory review and risk disposal, take the following measures against banking financial institutions: (1) ordering them to suspend part of their business or cease all business operations; (2) restricting the payment of dividends and other income; (3) restricting asset transfers; (4) ordering them to replace directors and senior management personnel or restricting their rights; and (5) other measures prescribed by laws and administrative regulations.
Article 13 The banking supervisory authority under the State Council may, in accordance with law, inquire about the accounts of banking financial institutions and interested parties, and may apply to judicial authorities for the freezing of illegal funds.
Article 14 The banking supervisory authority under the State Council shall establish an off-site surveillance index system to monitor the capital adequacy, asset quality, management, profitability, and liquidity of banking financial institutions.
Chapter IV: Legal Liability
Article 15 Where a banking financial institution engages in business activities without approval or beyond its approved business scope, the banking supervisory authority under the State Council shall ban the activity and confiscate the illegal gains; where the illegal gains exceed RMB 500,000, a fine of not less than one time and not more than five times the illegal gains shall be imposed; where there are no illegal gains or the illegal gains are less than RMB 500,000, a fine of not less than RMB 500,000 and not more than RMB 2,000,000 shall be imposed.
Article 16 Where a banking financial institution refuses or obstructs the on-site inspection or off-site surveillance of the banking supervisory authority, or provides false or concealed information, the banking supervisory authority shall order it to make corrections and impose a fine of not less than RMB 200,000 and not more than RMB 500,000.
Article 17 Where a staff member of the banking supervisory authority engages in any of the following acts, a sanction shall be imposed in accordance with law; where a crime is constituted, criminal liability shall be pursued: (1) approving the establishment of a banking financial institution in violation of regulations; (2) divulging state secrets or trade secrets of the entity under inspection; (3) taking advantage of his or her position to seek improper benefits; or (4) other acts of abuse of power or neglect of duty.
Article 18 Where a banking financial institution violates the provisions of this Law and a crime is constituted, criminal liability shall be pursued in accordance with law.
Chapter V: Supplementary Provisions
Article 19 The supervision and administration of branches of foreign banks and other foreign-invested banking financial institutions established within the territory of China shall be governed by the provisions of this Law. Where laws and administrative regulations provide otherwise, such provisions shall prevail.
Article 20 This Law shall come into force on February 1, 2004.
Translation note: This is an unofficial English translation for reference purposes. The original Chinese text shall prevail in all legal matters.
