Banking News
- Forex rules set for commercial banks' overseas investment
Date: 27-Dec-2006 Sources: (Shenzhen Daily)
THE State Administration of Foreign Exchange (SAFE) issued rules Monday governing foreign-exchange management applying to commercial banks that offer overseas investment products.
Earlier this year, China started a program, often called the Qualified Domestic Institutional Investor (QDII) program, to allow banks take institutional and individual funds in yuan and invest them in fixed-income products offshore.
Commercial banks will be allowed to use their foreign-exchange quota for overseas investments on a revolving basis without applying for a new QDII quota if they meet certain criteria, said the SAFE in a statement on its Web site.
The criteria require that the commercial banks' outstanding foreign exchange balance relating to QDII doesn't exceed the QDII quota, said the SAFE. It added the balance doesn't take into account returns on investment.
The SAFE said commercial banks needn't apply for a QDII quota when using their clients' foreign currency-denominated funds for overseas investment.
The QDII program is part of China's attempts to widen channels for capital outflows as its foreign exchange reserves continue to grow rapidly, adding to flush liquidity in the country.
Last week, the China Insurance Regulatory Commission issued draft rules that let local insurers invest in stocks and share rights abroad.
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