China raises banks' overseas loan leverage ratios

This photo taken on Oct. 19, 2023 shows the People's Bank of China in Beijing, capital of China. [Photo/Xinhua]

China has increased leverage ratios for banks' overseas loans to enhance the role of financial services in supporting the real economy and facilitating trade and investment, according to a notice published on Wednesday by the People's Bank of China and the State Administration of Foreign Exchange.

Under these new regulations, the overseas loan leverage ratio for wholly foreign-owned banks, Sino-foreign joint venture banks, and branches of foreign banks in China will be raised from 0.5 to 1.5. Banking institutions established in the mainland by financial institutions from Hong Kong Special Administrative Region, Macao Special Administrative Region and Taiwan will be granted comparable treatment.

Additionally, the overseas loan leverage ratio for the Export-Import Bank of China will be increased from 3 to 3.5.

Where a bank's calculated limit for overseas loan balance is below 10 billion yuan (about 1.46 billion U.S. dollars), the central bank will set its overseas loan balance ceiling at 10 billion yuan.

The notice took effect immediately.