China has lifted restrictions on Chinese and foreign currency transactions by solely foreign-funded banks and Sino-overseas joint venture banks ahead of the opening up of the nation's tightly-held banking sector in mid-December.
The Chinese cabinet on Wednesday issued new regulations on foreign-funded banks which will take effect on December 11 as per Beijing's commitment to the World Trade Organisation (WTO) when it joined the global trade body.
The new regulations, approved by Chinese Premier Wen Jiabao, say that China will lift restrictions on Renminbi and foreign-currency transactions by solely foreign-funded banks and Sino-overseas joint venture banks.
Chinese branches of foreign banks, however, are banned from engaging in Renminbi services with Chinese citizens unless an individual, having obtained the approval of the Chinese banking regulatory body, makes a fixed deposit of no less than one million yuan (127,000 US dollars).
Solely foreign-funded banks and joint venture banks must have a minimum registered capital of one billion yuan or the equivalent in hard foreign currencies. Chinese branches of foreign banks must have a minimum operating fund of 200 million yuan or the equivalent in hard foreign currencies.
Foreign financial institutions who apply to set up solely-owned banks in China must have had no less than 10 billion US dollars in total assets at the end of the previous year. Foreign banks who apply to set up branches must have had no less than 20 billion US dollars in total assets at the end of the previous year.