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China's central bank issued an additional regulation yesterday concerning the Qualified Foreign Institutional Investor (QFII) scheme, clarifying key procedural matters when banks apply for a custodian's role.
The government unveiled the long-awaited reform earlier last month, allowing foreigners, through such QFIIs, to trade its A shares and bonds.
Six banks, including three Chinese and three foreign ones, have already applied to be a custodian bank for such investments.
It is unclear if they had filed their applications the right way, but in a circular published on its website yesterday, the People's Bank of China (PBOC) emphasized that only the headquarters, not branches of Chinese banks, China-incorporated foreign-owned or joint venture banks, or a single branch of a foreign-owned bank operating in China, can apply for custodianship.
Documents that foreign-owned banks, joint venture banks and foreign banks are required to prepare include a formal application signed by their headquarters, a detailed report on planned operations, operational procedures, risk and returns assessments, risk control measures, as well as staff and computer systems.
Domestic banks should apply according to interim rules on commercial banks' intermediary businesses promulgated last year, the PBOC said.
(China Daily December 18, 2002)
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