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China Banking Regulatory Commission Issues Provisional Measures on the Administration of Fixed Asset Loans - 中国银监会发布《固定资产贷款管理暂行办法》
September 10, 2009
Released on July 23, 2009, and effective as of October 23, 2009
The China Banking Regulatory Commission (“CBRC”) on July 23, 2009, issued the Provisional Measures on Loan Used for Fixed Assets Investment ("Measures") in regulating fixed asset loans, which are offered to enterprise legal person or other borrowers as allowed by the state regulations for borrower’s fixed asset investment. The Measures provide detailed conditions for applying for fixed asset loans, as well as requirements for lenders to conduct due diligence review, assess risks, sign the loan contract, issue and make payment of the loan, and enhance the administration after the issuance of the loan.
To prevent the borrower from using the loan for other purposes, the Measures provide that if one installment of the loan exceeds 5% of the total investment of the project or RMB5 million, the bank shall pay directly to a third party, who, according to the stipulated purpose of the loan contract, is the borrower’s counterparty and is entitled to receive the money from the borrower.