Central Bank and State Administration of Foreign Exchange: Overseas Loan Balance of Domestic Enterprises Capped at Multiple of Equity

People’s Financial News, March 20 — Officials from the People’s Bank of China and the State Administration of Foreign Exchange answered questions from reporters regarding the “Notice on the Issuance of the Administrative Measures for Domestic Enterprises’ Overseas Lending”: The limit on overseas lending balances for domestic enterprises is linked to their owners’ equity. The maximum overseas lending balance = the most recent audited owners’ equity of the lender × macro prudential adjustment factor. The overseas lending balance = ∑ of the lender’s foreign and domestic currency overseas loan balances + ∑ of the lender’s foreign currency overseas loan balances × currency conversion factor, set at 0.5. To better meet the cross-border operational funding needs of “going out” enterprises, the macro prudential adjustment factor has been raised from 0.5 to 0.6. To improve the management of overseas lending during and after the process, domestic enterprises and banks engaged in overseas lending should, in accordance with relevant regulations, promptly and accurately report international balance of payments statistics and submit data to the relevant accounts, foreign exchange settlement and sales, and the Renminbi cross-border payment and receipt information management system (RCPMIS).