China Laws and Regulations Update in November 2023

1. Administrative Measures for the Capital of Commercial Banks (Revised)

Promulgated by National Financial Regulatory Administration (NFRA)

Promulgated date: 1 November, 2023

Implementation date: 1 January, 2024

Document number: NFRA Order No. 4

Recently, the National Financial Regulatory Administration has issued the revised Administrative Measures for the Capital of Commercial Banks (hereinafter referred to as the Measures), which will come into force on January 1, 2024, and simultaneously issued the Circular on Matters Related to the Implementation of the Administrative Measures for the Capital of Commercial Banks. The Measures consists of 10 chapters and 206 articles, including the calculation of capital regulatory indicators and regulatory requirements, and the definition of capital. In terms of risk management requirements, the Measures requires the establishment and effective implementation of corresponding credit risk management systems, processes and mechanisms, the formulation by banks of business policies for and segmentation and management of trading desks on which the measurement of internal modeling method is based, and the establishment and improvement of the standards, rules and processes for the collection of loss data before applying for the adoption of loss multiplier and coefficient given by the administration. In terms of improving supervision and inspection requirements, the Measures clarifies that, on one hand, the content of supervision and inspection should be improved with reference to international standards; on the other hand, the implementation of the policy should be facilitated based on the existing domestic supervisory system. (Source: National Financial Regulatory Administration)