Chapter I. General Provisions

Article 1 The present Law is formulated to strengthen the
supervision over the banking industry, regulate the activities of
supervision, prevent and eliminate banking risks, protect the
legitimate rights and interests of the depositors and other clients
and promote the sound development of the banking industry.

Article 2 The banking supervision institution of the State Council
shall be responsible for the supervision over the nationwide banking
financial institutions and operations.
The term "banking financial institutions" as mentioned in the
present Law refers to the commercial banks, urban credit
cooperatives, rural credit cooperatives and other financial
institutions and policy banks established within China and engaged
in taking in deposits of the general public.
The present Law shall be applicable to the supervision over the
financial assets management companies, trust investment companies,
financial companies and the financial lease companies established
within the People''s Republic of China and other financial
institutions established within China upon approval of the banking
supervision institution of the State Council.
The banking supervision institution of the State Council shall, in
accordance with the relevant provisions of the present Law, conduct
supervision over the financial institutions established abroad upon
its approval and the overseas operations of the financial
institutions as mentioned in the preceding two paragraphs.
Article 3 The banking supervision shall be targeted for promoting
the lawful, steady, and sound operations of the banking industry,
and maintaining the confidence of the general public in the banking.
The banking supervision shall protect the fair competitions of
banking and improve the competitive ability of the banking industry.
Article 4 When conducting banking supervision, the banking
supervision institutions shall comply with the principle of law
compliance, openness, impartiality and efficiency.
Article 5 The banking supervision institutions and their
functionaries engaged in banking supervision shall perform their
duties in accordance with the law, shall be protected by the law.
None of the local governments, government departments of all levels,
the social institutions and individuals may interfere with them.
Article 6 The banking supervision institution of the State Council
shall establish a supervision information sharing system with the
People''s Bank of China and the other financial supervision
institutions of the State Council.
Article 7 The banking supervision institution of the State Council
may also establish cooperation systems with the banking supervision
institutions of other countries or regions for the purpose of
conducting transnational supervision.
Chapter II. Supervision Institutions
Article 8 The banking supervision institution of the State Council
may set up dispatched institutions in light of the needs for
exercising their duties. The banking supervision institution of the
State Council shall practice unified leadership and management to
the institutions dispatched by it.
The institutions dispatched by the banking supervision institution
of the State Council shall, within the powers granted by the banking
supervision institution of the State Council, perform their
supervision duties.
Article 9 Among the functionaries of the banking supervision
institutions, those engaged in supervision shall have the
professional knowledge and experiences adapting to their respective
post.
Article 10 The functionaries of the banking supervision institutions
shall devote to their duties, handle matters in pursuance of the
law, be impartial and clean, shall not seek improper interests by
taking advantages of their posts, and shall not hold concurrent
positions in other financial institutions or other enterprises.
Article 11 The functionaries of banking supervision institutions
shall keep the secrets of the state in accordance with the law, and
shall be obligated to keep the secrets of the banking financial
institutions and the parties concerned under their supervision.
Where the banking supervision institution of the State Council
exchanges supervision information with the banking supervision
institutions of other countries or regions, it shall make an
arrangement to keep the information secret.
Article 12 The banking supervision institution of the State Council
shall disclose the supervision procedures, shall establish
supervision responsibility system and internal supervision system.
Article 13 When the banking supervision institutions deal with the
risks of a banking financial institution, investigate into and
punish relevant illegal financial offences, or carry out other
supervision activities, the local governments, the departments of
all levels shall support and cooperate with them.
Article 14 The auditing, supervision and other organs of the State
Council shall conduct supervision over the activities of the banking
supervision institution of the State Council in pursuance of the
law.
Chapter III. Supervision Duties
Article 15 In accordance with the law and the administrative
regulations, the banking supervision institution of the State
Council shall formulate and issue regulations and rules governing
the supervision over the financial banking institutions and their
operations.
Article 16 In pursuance of the requirements and procedures as
prescribed in the laws and the administrative regulations, the
banking supervision institution of the State Council shall be
responsible for the examination and approval of the establishment,
modifications, termination and operation scope of the banking
financial institutions.
Article 17 With regard to an applicant for establishing a financial
institution or a banking financial institution that modifies the
shareholder whose total capital contributions or total shares reach
or exceed the prescribed proportion, the banking supervision
institution of the State Council shall examine the shareholder''s
sources of funds, financial status, capital adequacy and credit
standing.
Article 18 The operations within the operation scope of a banking
financial institution shall be subject to the examination and
approval of or be registered by the banking supervision institution
of the State Council. The specific operations shall be prescribed
and announced by the banking supervision institution of the State
Council in accordance with the laws and administrative regulations.
Article 19 Without approval of the banking supervision institution
of the State Council, no entity or individual may establish any
banking financial institution or carry on operations as a banking
financial institution.
Article 20 The banking supervision institution of the State Council
shall adopt qualification management for the appointment of
directors and senior managerial personnel of the banking financial
institutions and it shall formulate specific measures.
Article 21 The rules for prudent operations governing the banking
financial institutions may be provided for in the laws and
administrative regulations, and may also be formulated by the
banking supervision institution of the State Council in accordance
with the laws and administrative regulations.
The term "rules for prudent operations" as mentioned in the
preceding paragraph covers the risk management, internal control,
capital adequacy ratio, quality of capital, loss reserve fund, risk
concentration, related transactions and liquidity of assets, etc.
All banking financial institutions shall strictly abide by the rules
for prudent operations.
Article 22 The banking supervision institution of the State Council
shall, within the prescribed time limit, make a written decision
about approving or disapproving any of the following items; if it
decides to disapprove, it shall give the reasons:
(1) The establishment of a banking financial institution, within 6
months from the day when the application documents are received;
(2) The modification or termination, the operation scope and the
operations added to the operation scope of a banking financial
institution, within 3 months from the day when the application
documents are received;
(3) The examination of the qualifications of the directors and
senior managerial personnel, within 30 days from the day when the
application documents are received.
Article 23 The banking supervision institutions shall conduct
non-on-site supervision over the operations and risk status of the
banking financial institutions, shall establish banking financial
institution supervision information system, and shall analyze and
evaluate the risk status of banking financial institutions.
Article 24 A banking supervision institution shall conduct on-site
inspection on the operations and risk status of the banking
financial institutions.
The banking supervision institution of the State Council shall
formulate on-site inspection procedures, and regulate on-site
inspections.
Article 25 The banking supervision institution of the State Council
shall adopt consolidated financial statements in conducting
supervision over the banking financial institutions.
Article 26 With regard to the advice given by the People''s Bank of
China about the inspection on banking financial institutions, the
banking supervision institution of the State Council shall make a
reply within 30 days from the day it receives the advice.
Article 27 The banking supervision institution of the State Council
shall establish a banking financial institution supervision grade
evaluation system and a risk pre-warning system. It shall, in light
of the grade and the risk situation of a banking financial
institution, determine the frequency and scope of on-site
inspections, and other necessary measures.
Article 28 The banking supervision institution of the State Council
shall establish a post responsibility system for the discovery and
reporting of banking emergencies.
Where a banking supervision institution discovers an emergency may
result in a systematic banking risk or may seriously affect the
stability of the society, it shall immediately report to the
person-in-charge of the banking supervision institution of the State
Council. If the person-in-charge considers it necessary to report to
the State Council, it shall report to the State Council at once, and
shall inform the People''s Bank of China, the finance department of
the State Council and other relevant departments.
Article 29 The banking supervision institution shall, jointly with
the People''s Bank of China, the finance department of the State
Council and other relevant departments, shall establish a banking
emergency handling system, formulate a banking emergency disposal
plan and clearly specify the handing institutions, the personnel and
their duties, the measures and procedures so as to timely and
effectively handle any banking emergencies.
Article 30 The banking supervision institution of the State Council
shall be responsible for the making of unified statistics and
statements of the nationwide banking financial institutions, and
shall announce them in accordance with relevant regulations of the
State.
Article 31 The banking supervision institution of the State Council
shall guide and supervise the activities of the banking
self-disciplinary organizations.
The constitution of any banking self-disciplinary organization shall
be submitted to the banking supervision institution of the State
Council for archival purposes.
Article 32 The banking supervision institution of the State Council
may carry out activities of international communication and
cooperation related to banking supervision.
Chapter IV. Supervision Measures
Article 33 A banking supervision institution shall, in light of the
needs to perform its duties, have the power to demand the banking
financial institutions to submit their asset-liability statements,
profit statements, and other financial and accounting statements,
operation management materials and the audit reports issued by
certified public accountants.
Article 34 In accordance with the requirement of prudent
supervision, a banking supervision institution shall taking
following measures for conducting on-site inspection:
(1) To conduct inspection by entering into a banking financial
institution;
(2) To question the functionaries of the banking financial
institution, to demand them to give explanations about the relevant
to-be-inspected items;
(3) To examine and copy the documents and materials relating to the
to-be-inspected items, to seal up the documents and materials that
may be moved, hidden or destroyed;
(4) To examine the banking financial institution''s computer system
for operation data management.
An on-site inspection shall be subject to the approval of the
person-in-charge of the banking supervision institution. In an
on-site inspection, the number of inspectors shall not be less than
2, and the inspectors shall show their legitimate certificates and
the inspection notice. Under the circumstance of insufficient number
of inspectors or a failure to show the legitimate certificates and
inspection notice, the banking financial institution shall be
entitled to refuse the inspection.
Article 35 In light of the needs to perform the duties, a banking
supervision institution may talk with the directors and the senior
managerial personnel of a banking financial institution, may demand
them to give explanations about significant matters concerning the
operations and risk control of this banking financial institution.
Article 36 The banking supervision institutions shall order the
banking supervision institutions to faithfully disclose the
information about the financial and accounting statements, the
status of risk management, the replacement of the directors and
senior managerial personnel and other significant matters.
Article 37 Where a banking financial institution is in violation of
the prudent operation rules, the banking supervision institution of
the State Council or its dispatched institution of the province
level shall order it to get right within a time limit. If the
banking financial institution fails to do so, or if its offences are
so serious that will endanger the steady and sound operations of the
banking financial institution or impair the legitimate rights and
interests of the depositors or other clients, the following measures
may be taken on the basis of different circumstances upon approval
of the person-in-charge of the banking supervision institution of
the State Council:
(1) To order it to suspend some of its operations, to stop approving
new operations;
(2) To restrict the distribution of bonus and other incomes;
(3) To restrict the alienation of assets;
(4) To order the controlling shareholder to transfer its stock right
or to restrict the powers of relevant shareholders;
(5) To order it to replace the directors and senior managerial
personnel or restrict their powers;
(6) To stop approving the establishment of any new branches.
After a banking financial institution gets right, it shall submit a
report to the banking supervision institution of the State Council
or to its dispatched institution on the province level, which shall
conduct a re-inspection. If the banking financial institution is
found to meet the prudent operation rules upon re-inspection, the
relevant measures as mentioned in the preceding paragraph shall be
lifted within 3 days as of the completion of the re-inspection.
Article 38 Where a banking financial institution has already had or
may have a credit crisis, which seriously impairs the legitimate
rights and interests of the depositors and other clients, the
banking supervision institution of the State Council may take over
the banking financial institution or urge it to restructure. The
taking over and restructure shall be implemented in accordance with
the relevant laws and the regulations of the State Council.
Article 39 Where a banking financial institution conducts illegal
operations or faulty operations and management, and it will
seriously impair the financial order and the interests of the
general public unless cancelled, the banking supervision institution
of the State Council shall be empowered to cancel it.
Article 40 Where a banking financial institution is taken over,
restructured or canceled, the banking supervision institution of the
State Council shall be empowered to demand the directors, the senior
managerial personnel and other functionaries to perform their duties
according to the requirements of the banking supervision institution
of the State Council.
During the course of taking over, restructure or cancellation
liquidation, the following measures may be taken against the direct
liable directors, senior managerial personnel and other direct
liable persons upon approval of the person-in-charge of the banking
supervision institution of the State Council:
(1) If the direct liable directors, senior managerial personnel and
other direct liable persons exit China, and the interests of the
state will suffer a serious loss, the exit administrative organs
shall be given a notice prohibiting them from exiting China in
accordance with the law;
(2) It shall request the judicial organ to prohibit the banking
financial institution from moving, transferring its properties or
setting other rights to its properties.
Article 41 Upon approval of the person-in-charge of the banking
supervision institution of the State Council or upon approval of the
person-in-charge of its dispatched institution on the province
level, the banking supervision institution shall be empowered to
inquire about the bank accounts of a banking financial institution
that is suspected of conducting illegal financial operations, its
functionaries and other persons involved. With regard to those who
are suspected of moving or hiding illegal funds, upon approval of
the person-in-charge of the banking supervision institution, an
application may be filed to the judicial organ for freezing the
funds.
Chapter V. Legal Liabilities
Article 42 Any of the functionaries engaged in supervising banking
supervision institutions is under any of the following circumstances
shall be given an administrative sanction in pursuance of the law;
if any crime is constituted, he (she) shall be subject to the
criminal liabilities.
(1) Violating the requirements in examining and approving the
establishment, modifications, termination, operation scope and the
specific operations within the operation scope of the banking
financial institutions;
(2) Violating the requirements in conducting on-site inspections on
the banking financial institutions;
(3) Failing to report the emergencies in accordance with Article 28
of the present Law;
(4) Violating the requirements in inquiring about the banking
accounts or applying for freezing them;
(5) Violating the requirements in taking measures against or
punishing a banking financial institution; or
(6) Other offences of abusing his (her) powers or neglecting his
(her) duties.
With regard to a functionary engaged in supervising banking
supervision institutions who embezzles public funds, accepts bribes,
betrays state secrets or divulges the commercial secrets that he
(she) knows, if any crime is constituted, he (she) shall be subject
to the criminal liabilities in accordance with the law; if no crime
is constituted, he (she) shall be given an administrative sanction
in accordance with the law.
Article 43 Any one who establishes a banking financial institution
without approval or illegally carries on operations as a banking
financial institution shall banned by the banking supervision
institution of the State Council; if any crime is constituted, he
(she) shall be subject to criminal liabilities; if no crime is
constituted, the banking supervision institution of the State
Council shall confiscate its illegal gains; if the amount of the
illegal gains is not less than 550, 000 Yuan, a fine of not less
than the same amount of but not more than 5 times of the amount of
the illegal gains shall be imposed on it; if there are no illegal
gains or the amount of the illegal gains is less than 550, 000 Yuan,
a fine of 500, 000 Yuan up to 2, 000, 000 Yuan shall be imposed on
it.
Article 44 Where a banking financial institution is under any of the
following circumstances, it shall be ordered to get right by the
banking supervision institution of the State Council. If there are
illegal gains, the illegal gains shall be confiscated; if the amount
of the illegal gains are not less than 500, 000 Yuan, a fine of not
less than the same amount of or not more than 5 times of the amount
of the illegal gains shall be imposed; if there are no illegal gains
or the illegal gains are less than 500, 000 Yuan, a fine of 500, 000
up to 2, 000, 000 Yuan shall be imposed. If the circumstance is
extremely serious, or if the banking financial institution fails to
get right within the time limit, the banking supervision institution
of the State Council may order it to stop its operations for
internal rectification or withdraw its business license; if any
crime is constituted, it shall be subject to the criminal
liabilities according to law:
(1) Establishing a branch without approval;
(2) Making modification or terminating without approval;
(3) Violating any of the regulations, or carrying on operations
without approval or without registration;
(4) Violating any of the regulations, elevating or lowering savings
interest rates and credit interest rates.
Article 45 Where a banking financial institution is under any of the
following circumstances, it shall be ordered to get right by the
banking supervision institution of the State Council, and shall be
imposed on a fine of 200, 000 up to 500, 000 Yuan; if the
circumstance is extremely serious, or if it fails to get right
within the time limit, the banking supervision institution of the
State Council may order it to stop its operations for internal
rectification or withdraw it business license; if any crime is
constituted, it shall be subject to criminal liabilities in
accordance with the law:
(1) Appointing directors and senior managerial personnel without
undergoing qualification examination;
(2) Refusing or hindering the non-on-site supervisions or on-site
inspections;
(3) Providing false statements, reports and other documents and
materials or providing statements, reports and other documents and
materials without disclosing imports facts;
(4) Failing to disclose the information as required;
(5) Violating the prudent operation rules seriously; or
(6) Refusing to execute the measures as provided in Article 37 of
the present Law.
Article 46 Where a banking financial institution fails to provide
the statements, reports and other documents and materials as
required, it shall be ordered to get right the banking supervision
institution within a time limit. If it fails to get right within the
time limit, it shall be imposed on a fine of 100, 000 up to 300, 000
Yuan.
Article 47 Where a banking financial institution is in violation of
the laws, administrative regulations and the relevant regulation of
the state on banking supervision, the banking supervision
institution shall not only punish it in accordance with Articles 43
through 46 of the present Law, but also may take the following
measures in light of the different circumstances:
(1) To order the banking financial institution to give a
disciplinary sanction to the direct liable directors, senior
managerial personnel and other liable persons;
(2) If the offences of the banking financial institution constitute
no crime, the direct liable directors, senior managerial personnel
and other direct liable persons shall be given a warning, and be
imposed on a fine of 50, 000 up to 500, 000 Yuan;
(3) To disqualify the direct liable directors, senior managerial
personnel from taking the positions for a certain time period to
even a life-long period, to prohibit the direct liable directors,
senior managerial personnel and other direct liable persons from
engaging in banking operations for a certain time period to even a
life-long period.
Chapter VI. Supplementary Provisions
Article 48 Where it is otherwise provided for the supervision over
the policy banks and financial assets management companies
established within the People's Republic of China in the laws and
administrative regulations, the relevant laws and administrative
regulations shall prevail.

Article 49 Where it is otherwise provided for the supervision over
the foreign-funded banking financial institutions, the Sino-foreign
joint equity banking financial institutions and the branches of
foreign banking financial institutions established within the
People's Republic of China in the laws and administrative
regulations, the relevant laws and administrative regulations shall
prevail.

Article 50 The present Measures shall be implemented as of February 1, 2004.