The "Commercial Bank Law" will welcome the third major revision: to improve the multi-level banking system, these eight aspects must be revised
The "Commercial Bank Law" will usher in the third revision.
On October 16, the central bank publicly solicited opinions on the "Law of the People's Republic of China on Commercial Banks (Revised Draft)" (hereinafter referred to as "Revised Draft").
The "Revision Draft" is clear in content and will establish classified access and differentiated regulatory mechanisms, improve market access conditions for commercial banks, and increase regulations on shareholder qualifications and prohibitions.
The Central Bank stated that the "Commercial Bank Law" was implemented in 1995 and revised twice in 2003 and 2015. A large number of clauses no longer meet actual needs and urgently need to be comprehensively revised.
It is worth noting that, due to the lack of specific regulations on customer protection obligations in the current Commercial Bank Law, further improvement is urgently needed. This revision will also strengthen the protection of customer rights.
What to modify?
The "Revised Draft" has 11 chapters and 127 articles, of which 4 chapters have been newly established or enriched after the integration, covering corporate governance, capital and risk management, customer rights protection, risk handling and market exit.
The content has been modified in eight aspects: one is to improve the types of commercial banks and expand the scope of legislative adjustment; the second is to establish a classified access and differentiated supervision mechanism; the third is to improve the corporate governance of commercial banks; the fourth is to strengthen capital and risk management; It is to improve business operation rules and highlight financial services to the real economy; six is to regulate customer rights protection; seven is to improve risk handling and market exit mechanisms; eight is to increase penalties for violations.
It is worth noting that the "Revision Proposal" has clearly improved the business scope and business rules of commercial banks.
The "Revised Draft" stated that commercial banks should formulate distinctive and professional development strategies based on the type, scale and actual business of the bank.
Regional commercial banks such as urban commercial banks, rural commercial banks, and village and township banks shall carry out business activities in accordance with the law within the limits of their domiciles, and shall not conduct business across regions without approval.
The State Council’s banking regulatory agency shall formulate specific regulations on the business scope of different types of commercial banks, the types and amounts of deposits that can be accepted, and the types and scale of customer groups.
At the same time, the "Revised Draft" clarifies the legal status of rural banks and reserves legal space for the emergence of new commercial banks in the future.
The "Revised Draft" stipulates that development financial institutions, policy banks, rural credit cooperatives, rural cooperative banks, enterprise group finance companies, financial leasing companies, auto finance companies, consumer finance companies, etc., handle commercial banking services specified in this law , The relevant provisions of this law apply.
In addition, it is worth noting that Article 55 (Interest Rate Mechanism) of the "Revised Draft" stipulates that commercial banks can independently negotiate with customers to determine deposit and loan interest rates in accordance with the relevant regulations of the People's Bank of China.
In terms of improving the risk management and market exit mechanism, the "Revised Proposal Draft" integrates and enriches the original Chapter 7 into Chapter 9 "Risk Management and Market Exit", refers to international standards, summarizes my country's banking industry's disposal experience, and establishes risk ratings and warnings , Early correction, reorganization, takeover, bankruptcy and other orderly disposal and exit mechanisms, standardize disposal procedures, strict disposal conditions, and improve the division of functions.
Improve the multi-level banking system
Over the past ten years, my country’s banking industry has developed rapidly. The number of participants has increased sharply, the scale has continued to grow, and the scope of business has gradually expanded. Innovative and cross-cutting financial services have continued to emerge, and legislation and supervision have faced many new situations.
The central bank stated that the amendment to the Commercial Banking Law is to support the objective needs of the rapid development of my country’s banking industry; the second is to guide banks to return to their origins and the inherent requirements of serving the real economy; the third is to prevent and defuse financial risks and maintain financial stability. It is a necessary condition for adhering to the market-oriented orientation and establishing and improving a multi-level banking system; the fifth is to strengthen the protection of customers' rights and interests and maintain the actual needs of fair market competition.
The central bank believes that in order to implement the requirements of “building a multi-level, wide-coverage, differentiated, and rational division of labor between large, medium and small,” it is urgently necessary to guide commercial banks from the institutional level to find the correct positioning, diversify and professionalize development, and promote financial supply Side structural reforms to promote healthy market competition.
Everbright Securities Banking Chief Analyst Wang Yifeng recently released a research report that the banking industry's operating performance in the third quarter will be reversed from market pessimism, regulatory requirements have been loosened, and industry revenue and profit growth tend to converge.
However, due to the annual disposal and write-off factors, the performance of different banks has diverged.
In view of the strong recovery momentum of the domestic economy and the possible change in the allocation of institutional investors, the investment opportunities in bank stocks in the fourth quarter will outweigh the risks, and there is room for restoration of sector valuations.
Recently, the Bank of China issued the "Global Banking Outlook Report" and pointed out that under the impact of the epidemic, my country should take this as an opportunity to appropriately improve bank access standards, steadily grasp the pace of bank access, and adjust the number of banking institutions to achieve efficiency, safety and security. Supervise the balance of resource allocation.
my country should deepen the structural reform of the financial supply side, form a clearer and more detailed top-level design for different bank franchise values, business boundaries and service targets, and guide banks to differentiate competition.
Through differentiated supervision costs and threshold design, guide the differentiated development of various banks and restrain the scale complex in the development of the banking industry.