China announces special rules on policy banks

China's banking regulator released special rules for the country's three policy banks for the first time on Wednesday, featuring a capital restraint mechanism to strengthen risk control.

Since their establishment in 1994, there have been no special regulatory policies on the banks, namely China Development Bank (CDB), the Export-Import Bank of China (China EximBank) and Agricultural Development Bank of China (ADBC), which basically followed the same rules with commercial banks.

The practice barely meets the changing regulatory requirements as the banks' increasing services and widening business scopes have posed a challenge to risk control, said Zhou Minyuan, an official from the China Banking Regulatory Commission.

Zhou said there is an urgent need to build a regulatory system for policy lenders.

The new rules contained a capital restraint mechanism that centers on capital adequacy ratios, and set differentiated requirements for each bank.

While CDB should focus on long-term financing for major economic tasks, China EximBank is aimed at supporting foreign trade and opening up. ADBC mainly serves grain security, agricultural modernization and rural infrastructure.

The rules also included specific items on corporate governance, internal control and capital management.

At the end of September, total assets of the three banks stood at 25.12 trillion yuan (3.79 trillion U.S. dollars), and loans aggregated 17.41 trillion yuan. Around 1.42 trillion yuan of lending was directed into the Belt and Road Initiative.