China Unveils Revisions to Banking Regulations for Sustainable Development and Data Security

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China’s banking regulatory body has released a series of updates and revisions aimed at streamlining lending practices, promoting sustainable development, and addressing data security concerns. The National Financial Regulatory Authority (NFRA) announced the changes on February 2, which will take effect on July 1.

Streamlined Lending Practices

The NFRA has revised measures governing fixed asset loans, working capital loans, and personal loans to clarify and broaden their scope of use. The new regulations also adjust standards for loan amounts and repayment terms to improve credit management capabilities and financial services quality.

Strengthened Loan Management

The revised regulations aim to strengthen the management of loan extensions to improve credit risk assessment and financial stability. This includes setting up processes for regulatory reporting, monitoring digital cooperation risks, and strengthening technology risk management.

Commercial Property Loans

In a separate move, the People’s Bank of China (PBOC) and NFRA jointly issued a circular on commercial property loans, effective January 24. The measure sets out detailed requirements for the issuance of such loans by commercial banks, including regulatory scope, loan tenures, amounts, and purposes.

Foreign Debt Regulations

The PBOC also updated regulations governing medium- to long-term foreign debt borrowed by Chinese enterprises, which took effect on February 10. The new rules aim to align foreign debt uses with market conditions and actual enterprise needs, while imposing heavier liability for non-compliant borrowers.

International Participation in Banking Sector

China is further opening up its banking sector to international participation, with the NFRA revising regulations to make it easier for overseas institutions to invest in financial asset management companies. The authority has also broadened the scope of deposits received by auto finance companies and introduced foreign currencies for business operations.

Green Finance Initiative

To support China’s ambitious targets to reduce carbon emissions and promote sustainable development, the government has introduced policies and initiatives to encourage green finance. The total outstanding balance of China’s green loans stood at 30.08 trillion yuan as of year-end 2023, a year-on-year increase of 36.5 per cent.

China’s banks have been at the forefront of promoting environmental, social, and governance (ESG) work and have made positive progress. The government has encouraged banks to integrate green and low-carbon development goals into loan extension criteria and issue green bonds to attract long-term institutional investors.

Conclusion

These moves reflect China’s continued commitment to refining its financial regulations to support sustainable development, promote international cooperation, and address data security concerns. By streamlining lending practices, strengthening loan management, and promoting green finance, China is taking a significant step towards creating a more stable and sustainable financial system.