Mumbai: China has relaxed restrictions on foreign currency transactions ahead of the opening up of the nation's tightly-held banking sector in mid-December. Beijing had so far restricted foreign currency transactions to foreign-funded banks and Sino-overseas joint venture banks
The Chinese cabinet has issued new regulations on foreign-funded banks, which will take effect on December 11. The new regulations, approved by Chinese premier Wen Jiabao, says that China will lift restrictions on Renminbi and foreign-currency transactions by solely foreign-funded banks and Sino-overseas joint venture banks.
Foreign bank branches in China, however, are banned from engaging in Renminbi services with Chinese citizens unless they have obtained approval from the Chinese banking regulatory body and individually make fixed deposits of no less than one million yuan ($127,000).
Foreign-funded banks and joint venture banks in China must have a minimum registered capital of one billion yuan or the equivalent in hard foreign currencies for undertaking foreign currency transactions. Chinese branches of foreign banks planning foreign currency transactions must have a minimum operating fund of 200 million yuan or the equivalent in hard foreign currencies.
For foreign financial institutions proposing to set up solely-owned banks in China the government has fixed a minimum asset base above $10 billion at the end of the previous year. Foreign banks planning to set up branches must have had no less than $20 billion in total assets at the end of the previous year .
The new regulations arise from Beijing's commitment to the World Trade Organisation (WTO) when it joined the global trade body.