Law of the People’s Republic of China on Commercial Banks

Adopted at the 13th Meeting of the Standing Committee of the
Eighth National People’s Congress on May 10, 1995, promulgated by
Order No. 47 of the President of the People’s Republic of China on
May 10, 1995, and amended in accordance with the Decision of the
Standing Committee of the National People’s Congress on Amending
the Law of the People’s Republic of China on Commercial Banks
adopted at the Sixth Meeting of the Standing Committee of the Tenth
National People’s Congress on December 27, 2003) 

Contents 

Chapter I     General Provisions 

Chapter II    Establishment and Organizational
Structure of Commercial Banks 

Chapter III   Protection of depositors 

Chapter IV    Basic Rules for Loans and Other Business
Operations 

Chapter V     Financial Affairs and
Accounting 

Chapter VI    Supervision and Control 

Chapter VII   Assumption of Control and
Termination 

Chapter VIII  Legal Responsibility 

Chapter IX    Supplementary Provisions 

Chapter I 

General Provisions 

Article 1 This Law is enacted in order to protect the lawful
rights and interests of commercial banks, depositors and other
clients, to standardize the behavior of commercial banks, to raise
the quality of credit assets, to strengthen supervision and
control, to ensure the stable and sound operation of commercial
banks, to maintain financial order and to promote the development
of the socialist market economy. 

Article 2 For the purposes of this Law, the term “commercial
banks” means enterprise legal persons that are established in
conformity with this Law and the Company Law of the People’s
Republic of China and that take in deposits from the general
public, grant loans, handle settlements, etc. 

Article 3 Commercial banks may engage in some or all of the
following business operations: 

(1) taking in deposits from the general public; 

(2) granting short-term, medium-term and long-term
loans; 

(3) handling domestic and foreign settlements; 

(4) handling the acceptance and discounting of negotiable
instruments; 

(5) issuing financial bonds; 

(6) acting as an agent for the issue, honoring and underwriting
of government bonds; 

(7) buying and selling government bonds and financial
bonds; 

(8) engaging in interbank lending; 

(9) buying and selling foreign exchange and acting as an agent
for the purchase and sale of foreign exchange; 

(10) engaging in the business of bank cards; 

(11) providing letter of credit services and guaranty; 

(12) acting as an agent for the receipt and payment of money and
acting as an insurance agent; 

(13) providing safe deposit box services; and 

(14) other business operations as approved by the banking
regulatory authority under the State Council. 

The scope of business shall be specified in the articles of
association of the commercial bank, and submitted to the banking
regulatory authority under the State Council for
approval. 



Upon approval of the People’s Bank of China, commercial banks may
engage in the business of the settlement and sale of foreign
exchange.

Article 4 The business operations of commercial banks shall be
governed by the principles of safety, liquidity and
efficiency.  Commercial banks shall make their own decisions
regarding their business operations, take responsibility for their
own risks, assume sole responsibility for their profits and losses
and exercise self-restriction. 

Commercial banks shall, pursuant to law, conduct business
operations without interference from any unit or
individual. 

Commercial banks shall independently assume civil liability with
their entire legal person property. 

Article 5 Commercial banks shall adhere to the principles of
equality, voluntariness, fairness and good faith in business
dealings with their clients. 

Article 6 Commercial banks shall safeguard the lawful rights and
interests of depositors against infringement by any unit or
individual. 

Article 7 In credit transactions, commercial banks shall
strictly examine the credit-worthiness of a borrower and implement
the system of guaranty in order to ensure that the loan is
recovered on schedule. 

Commercial banks shall be protected by law when they recover the
principal of loans that have become due and the interest thereon
from the borrowers in accordance with legal provisions. 

Article 8 In business transactions, commercial banks shall abide
by the relevant provisions of laws and administrative rules and
regulations and may not harm the interests of the State or of the
public. 

Article 9 In business transactions, commercial banks shall abide
by the principle of fair competition and may not engage in
illegitimate competition.  

Article 10 Commercial banks shall, in accordance with law,
accept supervision and control of the banking regulatory authority
under the State Council, but where laws provide that their relevant
business operations shall be subject to supervision and control of
other regulatory departments or bodies, such provisions shall
prevail. 

Chapter II 

Establishment and Organizational Structure of Commercial
Banks 

Article 11 The establishment of commercial banks shall be
subject to examination and approval by the banking regulatory
authority under the State Council. 

No unit or individual may engage in commercial banking business
such as taking in deposits from the general public, and no unit may
use the word “bank” in its name, without approval of the banking
regulatory authority under the State Council. 

Article 12 A commercial bank shall meet the following
requirements for establishment: 

(1) having articles of association that conform to this Law and
the Company Law of the People’s Republic of China; 

(2) having the minimum amount of registered capital as specified
in this Law; 

(3) having directors and other senior administrators with the
expertise and experience in work commensurate with the positions
they are holding; 

(4) having a sound organizational structure and management
system; and 

(5) having the required place of business, security and
precautionary measures and other facilities relevant to it business
operations. 

The establishment of a commercial bank shall, in addition, meet
other requirements of prudence. 

Article 13 The minimum amount of registered capital required for
the establishment of a national commercial bank shall be RMB one
billion yuan. The minimum amount of registered capital required for
the establishment of an urban commercial bank shall be 100 million
yuan, and the minimum amount of registered capital required for the
establishment of a rural commercial bank shall be 50 million yuan.
Registered capital shall be paid-up capital. 

The banking regulatory authority under the State Council may
readjust the minimum amount of registered capital on the basis of
the requirements of prudent supervision and control, however, the
readjusted amount may not be lower than the amount specified in the
preceding paragraph. 

Article 14 To establish a commercial bank, the applicant shall
provide the following documents and information to the banking
regulatory authority under the State Council: 

(1) a written application, in which the name, location,
registered capital, scope of business, etc. of the proposed
commercial bank are clearly stated ; 

(2) a feasibility study; and 

(3) other documents and information to be provided as specified
by the banking regulatory authority under the State
Council. 

Article 15 If an application for establishing a commercial bank
is found, after examination, to be in conformity with the
provisions of Article 14 of this Law, the applicant shall complete
an official application form and provide the following documents
and information: 

(1) a draft of the articles of association; 

(2) the qualification certificates of the director or other
senior administrator who is to hold office; 

(3) an investment verification certificate issued by a statutory
investment verification organization; 

(4) a list of the names, capital contributions and shares of
shareholders; 

(5) credit-worthiness certificates and relevant information
concerning the shareholders that hold five percent or more of the
registered capital each; 

(6) business policies and plans; 

(7) information concerning the place of business, security and
precautionary measures and other facilities relevant to business
operations; and 

(8) other documents and information as specified by the banking
regulatory authority under the State Council. 

Article 16 A commercial bank the establishment of which has been
approved shall be issued a permit for operation by the banking
regulatory authority under the State Council and, on the strength
of such permit, register with the administrative department of
industry and commerce and obtain a business license from
it. 

Article 17 The organizational form and structure of commercial
banks shall be governed by the Company Law of the People’s Republic
of China. 

Commercial banks, established prior to the implementation of
this Law, that do not entirely conform to the provisions of the
Company Law of the People’s Republic of China in organizational
form and structure   may continue to be governed by
previous regulations. The date on which the preceding paragraph
shall apply to such commercial banks shall be specified by the
State Council. 

Article 18 A board of supervisors shall be established in a
wholly State-owned commercial bank. Measures for forming the board
of supervisors shall be formulated by the State Council. 

The board of supervisors shall exercise supervision over the
quality of credit assets of the wholly State-owned commercial bank,
its assets-liabilities ratios and maintenance of and increase in
the value of State-owned assets, and over the senior administrators
of the commercial bank to see whether they violate any laws,
administrative rules and regulations or the articles of association
or commit any acts which harm the interests of the bank. 

Article 19 Commercial banks may establish branches within and
outside the People’s Republic of China, in light of their needs in
business operations. The establishment of such a branch shall be
subject to examination and approval by the banking regulatory
authority under the State Council. The establishment of branches
within the People’s Republic of China shall not be restricted by
the administrative division of regions. 

When a commercial bank establishes a branch within the People’s
Republic of China, it shall allocate operating funds in keeping
with the scale of its business, in accordance with regulations. The
sum total of operating funds allocated to all the branches may not
exceed 60 percent of the total amount of the capital of the head
office. 

Article 20 To establish a branch of a commercial bank, the
applicant shall submit the following documents and information to
the banking regulatory authority under the State Council: 

(1) a written application, in which the name, amount of
operating funds and scope of business of the proposed branch, the
location of the head office and the branch, etc. are clearly
stated; 

(2) the applicant’s financial and accounting reports of the
preceding two years; 

(3) the qualification certificates of the senior administrators
who are to hold office; 

(4) business policies and plans; 

(5) information concerning the place of business, security and
precautionary measures and other facilities relevant to business
operations; and 

(6) other documents and information as specified by the banking
regulatory authority under the State Council. 

Article 21 A commercial bank’s branch the establishment of which
has been approved shall be issued a permit for operation by the
banking regulatory authority under the State Council and, on the
strength of such permit, register with the administrative
department of industry and commerce and obtain a business license
from it. 

Article 22 With respect to their branches, commercial banks
shall apply across the board a financial system of centralized
accounting and centralized movement of funds, and of management at
different levels. 

Branches of commercial banks shall not have the status of a
legal person and shall lawfully conduct their business operations
within the scope authorized by their head offices, and their civil
liability shall be assumed by their head offices. 

Article 23 The banking regulatory authority under the State
Council shall announce its approval of the establishment of
commercial banks and their branches. 

If a commercial bank or branch thereof fails, without good
reason, to commence business more than six months after the date of
obtaining its business license or, after commencing business,
suspends business without authorization for six months or more in
succession, the banking regulatory authority under the State
Council shall revoke its permit for operation and make it known to
the public. 

Article 24 A commercial bank shall obtain the approval of the
banking regulatory authority under the State Council for making any
of the following changes: 

(1) change of name; 

(2) change in the registered capital; 

(3) change of location of the head office or a branch; 

(4) adjustment of the scope of business; 

(5) change of shareholders that hold five percent or more of the
total amount of capital or shares each; 

(6) revision of the articles of association; or 

(7) changes in other matters as are governed by the regulations
of the banking regulatory authority under the State
Council. 

When a director or a senior administrator is to be replaced, the
qualifications of the substitute for the position shall be
submitted to the banking regulatory authority under the State
Council for examination.           
    



Article 25 Division and merger of commercial banks shall be
governed by the provisions of the Company Law of the People’s
Republic of China. 

Division and merger of commercial banks shall be subject to
examination and approval by the banking regulatory authority under
the State Council. 

Article 26 Commercial banks shall use their permits for
operation  in accordance with the provisions of laws and
administrative rules and regulations. Forging, alteration,
assigning, leasing out or lending of such permits is
prohibited. 

Article 27 None of the following persons may serve as a director
or a senior administrator of a commercial bank: 

(1) persons who have been sentenced to criminal punishment for
the crime of embezzlement, bribery, seizure or misappropriation of
property  or disruption of  the public and economic
order, or persons who have been deprived of their political rights
for committing a crime; 

(2) directors of companies or enterprises, or factory directors
or managers who have been  subjected to bankruptcy liquidation
due to mismanagement, and who bear personal liability for the
bankruptcy; 

(3)  legal representatives of companies or enterprises that
had their business licenses revoked for breaking law, who bear
personal liability therefor; and 

(4) persons with comparatively large amounts of overdue personal
debts . 

Article 28 Purchase by any unit or individual of five percent or
more of the total amount of the shares of a commercial bank shall
be subject to prior approval by the People’s Bank of
China. 

Chapter III 



Protection of Depositors 

Article 29 In handling savings deposits for individuals,
commercial banks shall adhere to the principles of voluntary
deposit, unimpeded withdrawal, interest payment on deposits and
confidentiality for the depositors. 

Commercial banks shall have the right to refuse to answer the
inquiries into and to refuse to freeze, deduct or transfer an
individual’s savings deposits– as made or requested by any unit or
individual, except where otherwise provided for by law. 

Article 30 Commercial banks shall have the right to refuse to
answer the inquiries into a unit’s deposits by any other unit or
individual, except where otherwise provided for by laws and
administrative rules and regulations, and shall have the right to
refuse to freeze, deduct  or transfer  a unit’s deposits
as  requested by any other unit or individual, except where
otherwise provided for by law. 

Article 31 Commercial banks shall determine the interest rates
on deposits in accordance with the upper and lower limits interest
rates on deposits specified by the People’s Bank of China and make
them known  to the public. 

Article 32 Commercial banks shall place a deposit reserve with
the People’s Bank of China and maintain sufficient provision for
payment, in accordance with the regulations of the People’s Bank of
China. 

Article 33 Commercial banks shall guaranty, and may not delay or
refuse, payment of the principal of deposits and the interest
thereon. 

Chapter IV 

Basic Rules for Loans and Other Business
Operations 

Article 34 Commercial banks shall conduct their business of
lending in accordance with the needs of the national economic and
social development and under the guidance of the industrial
policies of the State. 

Article 35 Before granting a loan, commercial banks shall
strictly examine the borrower’s purpose for the loan, ability to
repay the loan, method of repayment, etc. 

When granting a loan, commercial banks shall implement the
system of separating the examination of a loan from the actual
provision of the loan and the system of examination and approval at
different levels. 

Article 36 To obtain a loan from a commercial bank, a borrower
shall provide a guaranty. The commercial bank shall strictly
examine the surety’s ability to repay the loan, the ownership and
value of the mortgage or the collateral and the feasibility of
realizing the right of mortgage or  right of pledge. 

If, after examination and appraisal by a commercial bank, a
borrower’s credit is found to be good, and the borrower is deemed
truly able to repay the loan, the borrower need not provide a
guaranty . 

Article 37 For granting a loan, the commercial bank shall
conclude a written contract with the borrower. The contract shall
stipulate the type, purpose, amount and interest rate of the loan,
the time limit for repayment, the method of repayment, liability
for breach of contract and other matters deemed necessary by the
parties. 

Article 38 Commercial banks shall determine loan interest rate
in accordance with the upper and lower limits for loan interest
rates prescribed by the People’s Bank of China. 

Article 39 When granting a loan, commercial banks shall abide by
the following provisions on the control of assets-liabilities
ratios: 

(1) the capital adequacy ratio may not be lower than 8
percent; 

(2) the ratio of the outstanding of loans to the outstanding of
deposits may not exceed 75 percent; 

(3) the ratio of the balance of floating assets to the balance
of floating liabilities may not be lower than 25 percent; 

(4) the ratio of the outstanding of loans granted to the same
borrower to the balance of the capital of the commercial bank may
not exceed 10 percent; and 

(5) other provisions of the banking regulatory authority under
the State Council concerning the control of assets-liabilities
ratios. 

If, after the implementation of this Law, the assets-liabilities
ratios of a commercial bank established prior to the implementation
of this Law are found not in conformity with the provisions of the
preceding paragraph, the bank shall make it conform to the
provisions of the preceding paragraph within a certain time limit.
The specific measures therefor shall be formulated by the State
Council. 

Article 40 Commercial banks may not grant fiduciary loans to
their connections. The conditions for granting secured loans to
their connections may not be more preferential than those for
granting  the same type of loans to other borrowers. 

For the purposes of the preceding paragraph, the term
“connections” means: 

(1) directors, supervisors, administrators and loan officers of
the commercial bank and close relatives of such persons; 

(2) companies, enterprises and other economic organizations in
which the persons mentioned in the preceding paragraph have
invested or in which they hold senior administrative
positions. 

Article 41 No unit or individual may forcibly demand a
commercial bank to grant a loan or to provide a guaranty.
Commercial banks shall have the right to refuse to grant a loan or
to provide a guaranty forcibly demanded by any unit or
individual. 

Article 42 Borrowers shall repay the loan principal and the
interest thereon on schedule. 

If a borrower fails to repay a secured loan upon maturity, the
commercial bank shall lawfully have the right to require the surety
to repay the loan principal and the interest thereon or the right
to preferential compensation in respect of the collateral.
Immovable property or stock rights obtained by a commercial bank
through the exercise of the right of mortgage or the right of
pledge shall be disposed of by it within two years from the date it
obtains the same. 

If a borrower fails to repay a fiduciary loan upon maturity, he
shall bear liability in accordance with the provisions of the
contract. 

Article 43 No commercial banks may, within the territory of the
People’s Republic of China, engage in trust investment or
securities business, or invest in immovable property which is not
for private use, in non-banking financial institutions or in
enterprises, except where otherwise provided for in the regulations
of the State. 

Article 44 When handling matters of settlement such as
acceptance or remittance of negotiable instruments or entrusted
receipt of payment, etc., commercial banks shall encash the
instruments and enter receipts and expenditures in their accounts
within the specified time limits, and may not deliberately delay or
withhold payment of bills and negotiable instruments or reject
negotiable instruments in violation of regulations. Regulations
relating to the time limits for encashing of
instruments and entering of receipts and expenditures in
the accounts shall be  announced. 

Article 45  To issue financial bonds or to raise loans from
outside the People’s Republic of China, commercial banks shall
first submit applications  for approval in accordance with the
provisions of laws and administrative rules and
regulations. 

Article 46 Inter-bank lending shall be carried out in adherence
to the regulations of the People’s Bank of China. It is forbidden
to use such loans for granting fixed assets loans or making
investment. 

Funds lent under such loans shall be limited to idle funds that
remain after a sufficient reserve against deposit has been
retained, sufficient provision for payment has been made and
matured loans from the People’s Bank of China have been repaid.
Funds borrowed under such loans shall be used to make up
deficiencies in the settlement of negotiable instruments and in the
funds available for covering remittance differences with
correspondent banks and to meet the temporary need for working
capital. 

Article 47 Commercial banks may not raise or lower interest
rates in violation of regulations or use other improper means to
take in deposits or grant loans. 

Article 48 Enterprises and institutions may select for
themselves the place of business of a commercial bank where to open
a basic account for the day-to-day settlement of account transfers
and for cash receipts and payments. They may not open more than one
basic account. 

No unit or individual may open an account in the name of an
individual to deposit the funds of a unit therein. 

Article 49 The business hours of commercial banks shall be such
as to be convenient to clients and shall be announced. Commercial
banks shall carry out business during announced business hours;
they may not suspend business or shorten their business hours
without authorization. 

Article 50 In carrying out business operations and providing
services, commercial banks shall charge commissions in accordance
with relevant regulations. The items and rates for such commissions
shall be specified by the banking regulatory authority under the
State Council and the People’s Bank of China based on their
division of responsibilities, in conjunction with the department of
pricing under the State Council respectively.

Article 51 Commercial banks shall preserve their financial and
accounting statements, business contracts and other materials in
accordance with relevant regulations of the State. 

Article 52 Employees of commercial banks shall abide by laws and
administrative rules and regulations and all other regulations for
the control of business operations; they may not: 

(1) use their positions to demand, receive or accept bribes, or
receive or accept rebates or commissions of any description in
violation of State regulations; 

(2) use their positions to embezzle, misappropriate or seize
money belonging to the bank or any client; 

(3) practise favoritism towards relatives or friends in granting
loans or providing guaranty in violation of regulations; 

(4) hold a concurrent position in another economic organization;
or 

(5) commit other acts in violation of laws, administrative rules
and regulations or other regulations for the control of business
operations. 

Article 53 No employees of commercial banks may disclose State
or business secrets that they come to know during their
employment. 

Chapter V 



Financial Affairs and Accounting 



Article 54 Commercial banks shall establish and perfect their own
financial and accounting systems in accordance with laws, the
uniform accounting system of the State and the relevant regulations
of the banking regulatory authority under the State
Council. 

Article 55 Commercial banks shall, in accordance with relevant
State regulations, truthfully record and give a complete account of
their business activities and financial position, draw up annual
financial and accounting reports and, without delay, submit them to
the banking regulatory authority under the State Council, the
People’s Bank of China and the department of finance under the
State Council. Commercial banks may not establish any account books
in addition to statutory account books. 

Article 56 Within three months after the end of every fiscal
year, commercial banks shall announce their business results and
audit reports for that year in accordance with the regulations of
the banking regulatory authority under the State Council.

Article 57 Commercial banks shall, in accordance with relevant
State regulations make allocations to a doubtful account reserve,
in order to set off doubtful accounts. 

Article 58 The fiscal year of commercial banks shall commence on
January 1 and end on December 31 of the Gregorian
calendar. 

Chapter VI 

Supervision and Control 

Article 59 Commercial banks shall, in accordance with relevant
regulations, formulate their own operating rules, and establish and
perfect their systems for risk management and internal
control. 

Article 60 Commercial banks shall establish and perfect their
own systems for examination and inspection of deposits, loans,
settlements, doubtful accounts, etc. 

Commercial banks shall conduct routine examination, inspection
and supervision with respect to their branches. 

Article 61 Commercial banks shall, in accordance with relevant
regulations, submit to the banking regulatory authority under the
State Council and the People’s Bank of China their balance sheets,
profit accounts and other financial, accounting and statistical
statements and information. 

Article 62 The banking regulatory authority under the State
Council shall have the right at any time to carry out inspection of
and exercise supervision over the deposits, loans, settlements,
doubtful accounts, etc. of commercial banks, in accordance with the
provisions of Chapters III, IV and V of this Law. When carrying out
inspection and supervision, the inspectors and supervisors shall
produce their lawful identification papers. Commercial banks shall
provide financial and accounting information, business contracts
and other information concerning operation and management in
compliance with the requirements of the banking regulatory
authority under the State Council. 

The People’s Bank of China shall have the power to inspect and
supervise the commercial banks in accordance with the provisions of
Articles 32 and 34 of the Law of the People’s Republic of China on
People’s Bank of China. 

Article 63 Commercial banks shall, according to law, accept
supervision by audit institutions through auditing. 

Chapter VII 

Assumption of Control and Termination 

Article 64 When a commercial bank has suffered or will possibly
suffer, credit crisis, thereby seriously affecting the interests of
the depositors, the banking regulatory authority under the State
Council may assume control over the bank. 

The purposes of assumption of control are, through taking such
measures as are necessary in respect of the commercial bank over
which control is assumed, to protect the interests of the
depositors and to enable the commercial bank to resume normal
business. The debtor-creditor relationship with regard to a
commercial bank over which control is assumed shall not change as a
result of the assumption of control. 

Article 65 The assumption of control shall be decided upon, and
its implementation shall be arranged, by the banking regulatory
authority under the State Council. In the decision made by the
banking regulatory authority under the State Council to assume
control shall be clearly stated the following
particulars: 

(1) the name of the commercial bank over which control is to be
assumed; 

(2) the reason for the assumption of control; 

(3) the organization that shall assume control; and 

(4) the period or time for the control. 

The decision for the assumption of control shall be announced by
the banking regulatory authority under the State Council. 

Article 66 Control shall be assumed on the date of
implementation of the decision to assume control. 

Beginning on the date of assumption of control, the organization
assuming control shall exercise the powers of operation and
management of the commercial bank. 

Article 67 The banking regulatory authority under the State
Council may decide to extend the period of time for control
upon  expiration of the time specified. However, the maximum
period of time for control shall be two years. 

Article 68 The  control shall be terminated under one of
the following conditions: 

(1) when the period of time  specified in the decision for
control has expired or the extended period of time for control
decided upon by the banking regulatory authority under the State
Council has expired; 

(2) the commercial bank has already become able to resume 
normal business before expiration of the period of control;
or 

(3) the commercial bank is merged or is lawfully declared
bankrupt before expiration of the period of control. 

Article 69 If a commercial bank has to be dissolved as a result
of division, merger or the occurrence of a cause for dissolution as
specified in the company’s articles of association, it shall submit
to the banking regulatory authority under the State Council an
application for dissolution, which is to be accompanied with a
statement of the reasons for dissolution and a plan for settlement
of debts such as repaying of the principal of the deposits together
with the interest thereon. The commercial bank shall be dissolved
upon approval by the banking regulatory authority under the State
Council. 

If a commercial bank is to be dissolved, a liquidation team
shall be established pursuant to law. The team shall, in accordance
with the plan for settlement of debts, carry out liquidation and
without delay pay debts such as the principal of the deposits and
the interest thereon. The banking regulatory authority under the
State Council shall supervise the process of liquidation. 

Article 70 If a commercial bank is to be dissolved because its
permit for operation is revoked, the banking regulatory authority
under the State Council shall without delay arrange to establish a
liquidation team pursuant to law, which shall, in accordance with
the plan for settlement of debts, carry out liquidation and without
delay pay debts such as the principal of the deposits and the
interest thereon . 

Article 71 If a commercial bank is unable to pay its debts as
they fall due, a People’s Court shall, after obtaining consent of
the banking regulatory authority under the State Council, lawfully
declare it bankrupt. If a commercial bank is declared bankrupt, the
People’s Court shall arrange for relevant authorities, such as the
banking regulatory authority under the State Council, and relevant
persons to establish a liquidation team, which shall carry out
liquidation. 

When liquidation is carried out after a commercial bank is
declared bankrupt, payment of the principal of savings deposits of
individuals and the interest thereon shall be given priority after
the liquidation expenses, the wages owed to the employees and labor
insurance premiums have been paid. 

Article 72 Commercial banks shall terminate if dissolved, closed
down or declared bankrupt. 

Chapter VIII 

Legal Responsibility 

Article 73 A commercial bank shall assume liability for payment
of default interest and other civil liability if the property of
depositors or other clients is damaged as a result of the
commercial bank’s: 

(1) delay in or refusal of payment of the principal of a deposit
and the interest thereon without good reason; 

(2) violation of regulations concerning matters of settlement
such as acceptance of negotiable instruments, etc. by refusing to
encash the instruments, refusing to enter receipts and expenditures
in its accounts, deliberately delaying or withholding payment under
bills or negotiable instruments, or rejecting negotiable
instruments in violation of regulations; 

(3) illegal inquiries into, freezing, withholding or transfer of
the savings deposits of individuals or the deposits of units;
or 

(4) other acts in violation of this Law that cause damage to
depositors or other clients. 

If a commercial bank commits one of the acts specified in the
preceding paragraph, it shall be instructed by the banking
regulatory authority under the State Council to rectify and its
unlawful gains shall be confiscated; if the unlawful gains exceed
50,000 yuan, it shall, in addition, be fined not less than the
amount of such gains but not more than five times that amount; and
if there are no unlawful gains or such gains are less than 50,000
yuan, it shall be fined not less than 50,000 yuan but not more than
500,000 yuan. 

Article 74 If a commercial bank commits one of the following
acts, it shall be instructed by the banking regulatory authority
under the State Council to rectify; if there are unlawful gains,
such gains shall be confiscated; if the unlawful gains exceed 500,
000 yuan, it shall, in addition, be fined not less than the amount
of such gains but not more than five times that amount; if there
are no unlawful gains or such gains are less than 500,000 yuan, it
shall be fined not less than 500,000 yuan but not more than
2,000,000 yuan; if the circumstances are particularly serious, or
if the bank fails to rectify at the expiration of the time
limit，the banking regulatory authority under the State Council may
instruct it to suspend business for rectification or may revoke its
business license; and if a crime is constituted, criminal
responsibility shall be investigated according to law: 

(1) establishing a branch without approval; 

(2) dividing or merging without approval or, in violation of
relevant regulations, failing to report for approval changes to be
made; 

(3) raising or lowering interest rates in violation of relevant
regulations or taking in deposits or granting loans by other
illegitimate means; 

(4) leasing out or lending its business license; 

(5) buying and selling, or acting as an agent for the purchase
and sale of, foreign exchange without approval; 

(6) buying or selling government bonds or issuing, buying or
selling financial bonds without approval; 

(7) in violation of relevant State regulations, engaging in
trust investment and the business of securities, investing in
immovable property which in not for private use, or investing in
non-banking financial institutions or enterprises ; and 

(8) granting fiduciary loans to its connections or granting
guaranteed loans to its connections on conditions that are more
preferential than those for granting the same to other
borrowers. 

Article 75 If a commercial bank commits one of the following
acts, it shall be instructed by the banking regulatory authority
under the State Council to rectify and, in addition, be fined not
less than 200, 000 yuan but not more than 500,000 yuan; if the
circumstances are particularly serious, or if the bank fails to
rectify at the expiration of the time limit，the banking regulatory
authority under the State Council may instruct it to suspend
business for rectification or revoke its business license; and if a
crime is constituted, criminal responsibility shall be investigated
according to law: 

(1) refusing to accept, or hindering, inspection and supervision
by the banking regulatory authority under the State
Council; 

(2) providing financial and accounting reports, statements and
statistical statements which are false or in which important facts
are concealed; or 

(3) failing to observe the regulations governing the capital
adequacy ratio, the ratio of deposits to loans, the asset liquidity
ratio, the ratio concerning loans granted to the same borrower, or
other regulations of the banking regulatory authority under the
State Council relating to control of assets-liabilities
ratio. 

Article 76 If a commercial bank commits one of the following
acts, it shall be instructed by the People’s Bank of China to
rectify; if there are unlawful gains, such gains shall be
confiscated; if the unlawful gains exceed 500,000 yuan, it shall,
in addition, be fined not less than the amount of such gains but
not more than five times that amount; if there are no unlawful
gains or such gains are less than 500,000 yuan, it shall be fined
not less than 500,000 yuan but not more than 2,000,000 yuan; if the
circumstances are particularly serious, or if the bank fails to
rectify at the expiration of the time limit，the People’s Bank of
China may put forward a proposal that the banking regulatory
authority under the State Council instruct it to suspend business
for rectification or revoke its business license; and if a crime is
constituted, criminal responsibility shall be investigated
according to law: 

(1) engaging in the settlement and sale of foreign exchange
without approval; 

(2) without approval, issuing, buying or selling financial bonds
at inter-bank bond markets, or borrowing loans from abroad;
or (3) in violation of relevant regulations, engaging in
inter-bank lending. 

Article 77 If a commercial bank commits one of the following
acts, it shall be instructed by the People’s Bank of China to
rectify and, in addition, be fined not less than 200, 000 yuan but
not more than 500,000 yuan; if the circumstances are particularly
serious, or if the bank fails to rectify at the expiration of the
time limit，the People’s Bank of China may put forward a proposal
that the banking regulatory authority under the State Council
instruct it to suspend business for rectification or revoke its
business license; and if a crime is constituted, criminal
responsibility shall be investigated according to law:  

(1) refusing to accept, or hindering, inspection and supervision
by the People’s Bank of China; 

(2) providing financial and accounting reports, statements and
statistical statements which are false or in which important facts
are concealed; or 

(3) failing to place a deposit reserve in the proportion
specified by the People’s Bank of China. 

Article 78 If a commercial bank commits one of the acts
specified from Article 73 through Article 77 of this Law, the
directors and senior administrators who are directly in charge and
the other persons who are directly responsible shall be given
disciplinary sanctions; and if a crime is constituted, criminal
responsibility shall be investigated according to law. 

Article 79 Any unit or individual that commits one of the
following acts shall be instructed by the banking regulatory
authority under the State Council to rectify, if there are unlawful
gains, such gains shall be confiscated; if the unlawful gains
exceed 50, 000 yuan, it shall, in addition, be fined not less than
the amount of such gains but not more than five times that amount;
and if there are no unlawful gains or such gains are less than
50,000 yuan, it shall be fined not less than 50,000 yuan but not
more than 500,000 yuan: 

(1) using the word “bank” in its name without
approval; 

(2) purchasing 5 percent or more of the total amount of the
shares of a commercial bank without approval; or 

(3) opening an account in the name of an individual to deposit
the funds of the unit. 

Article 80 If a commercial bank fails to submit the relevant
documents and information to the banking regulatory authority under
the State Council in accordance with relevant regulations, it shall
be instructed by the said authority to rectify; and if it fails to
rectify at the expiration of the time limit, it shall be fined not
less than 100, 000 yuan but not more than 300, 000 yuan. 

If a commercial bank fails to submit the relevant documents and
information to the People’s Bank of China in accordance with
relevant regulations, it shall be instructed by the People’s Bank
of China to rectify; and if it fails to rectify at the expiration
of the time limit, it shall be fined not less than 100, 000 yuan
but not more than 300, 000 yuan. 

Article 81 Any unit or individual, without approval of the
banking regulatory authority under the State Council, establishes a
commercial bank, or illegally takes in deposits from the general
public or does so in disguised form, which is serious enough to
constitute a crime, criminal responsibility shall be investigated
according to law, and such a commercial bank shall be closed down
by the banking regulatory authority under the State
Council. 

Any unit or individual that fabricates, counterfeits or
transfers the business license of a commercial bank, which is
serious enough to constitute a crime, criminal responsibility shall
be investigated according to law. 

Article 82 If a borrower uses fraudulent means to obtain a loan
and a crime is constituted thereby, criminal responsibility shall
be pursued according to law. 

Article 83 Any unit or individual commits one of the acts
specified in Articles 81 and 82 of this Law, which is not serious
enough to constitute a crime, its/ his unlawful gains shall be
confiscated by the banking regulatory authority under the State
Council; if the unlawful gains exceed 500, 000 yuan, it / he shall,
in addition, be fined not less than the amount of such gains but
not more than five times that amount and; if there are no unlawful
gains or such gains are less than 500,000 yuan, it / he shall be
fined not less than 500,000 yuan but not more than 2,000,000
yuan. 

Article 84 If an employee of a commercial bank, taking advantage
of his duties, demands, receives or accepts bribes or, in violation
of State regulations, receives or accepts rebates or commissions of
any description, which is serious enough to constitute, criminal
responsibility shall be investigated according to law; and if it is
not serious enough to constitute a crime, a disciplinary sanction
shall be imposed on him.     

If anyone commits an act specified in the preceding paragraph
and causes losses in granting a loan or providing a guaranty, the
person shall be fully or partially liable for
compensation. 

Article 85 If an employee of a commercial bank, taking advantage
of his duties, embezzles, misappropriates or takes into his
possession money belonging to the bank or any client, which is
serious enough to constitute a crime, criminal responsibility shall
be investigated according to law; and if it is not serious enough
to constitute a crime, a disciplinary sanction shall be imposed on
him.      

Article 86 If employees of a commercial bank cause losses by
neglecting their duties in violation of the provisions of this Law,
disciplinary measures shall be taken against them. If a crime is
constituted, criminal responsibility shall be pursued according to
law. 

If anyone causes losses by practicing favoritism towards his
relatives or friends in granting loans or providing guaranty in
violation of regulations, the person shall be fully or partially
liable for compensation. 

Article 87 If employees of a commercial bank disclose State or
business secrets that they  come  to know during their
employment, disciplinary measures shall be taken against them. If a
crime is constituted, criminal responsibility shall be pursued
according to law. 

Article 88 If any unit or individual forcibly demands a
commercial bank to grant a loan or to provide a guaranty,
disciplinary measures shall be taken against the leading members
of  the  unit who are directly in charge and other
persons of the unit who are directly responsible for the
offense  or the individual and, if losses are caused thereby,
these persons shall be fully or partially liable for
compensation. 

If employees of a commercial bank fail to refuse to grant a loan
or to provide a guaranty forcibly demanded by a unit or individual,
disciplinary measures shall be taken against them and, if losses
are caused thereby, they shall assume appropriate liability for
compensation. 

Article 89 If commercial banks violate the provisions of this
Law, the banking regulatory authority under the State Council may,
on the merits of each case, disqualify, for the positions for a
certain period of time or even for the rest of their lives, the
directors or senior administrators who are directly in charge, or
prohibit the directors or senior administrators who are directly in
charge and the other persons who are directly responsible from
working in the banking industry for a certain period of time or
even for the rest of their lives. 

If the act committed by a commercial bank is not serious enough
to constitute a crime, disciplinary warning shall be given to the
director or senior administrator directly in charge or the other
person directly responsible, and a fine of not less than 50, 000
yuan but not more than 500, 000 yuan shall be imposed. 

Article 90 If a commercial bank or its employees disagree with a
decision on a punishment made by the banking regulatory authority
under the State Council, or the People’s Bank of China, they may
institute proceedings with a People’s Court in accordance with the
provisions of the Administrative Procedure Law of the People’s
Republic of China.  

Chapter IX 



Supplementary Provisions 

Article 91 Commercial banks established prior to the
implementation of this Law, with approval granted in accordance
with the regulations of the State Council, shall not be required to
undergo examination and approval procedures again. 

Article 92 The provisions of this Law shall be applicable to
foreign-invested commercial banks, commercial banks of
Chinese-foreign equity joint venture and branches of foreign
commercial banks; and where other laws and administrative
regulations provide otherwise, the provisions of those laws and
administrative regulations shall prevail. 

Article 93 In handling their business such as deposits, loans
and settlements, urban credit cooperatives and rural credit
cooperatives shall apply the relevant provisions of this
Law. 

Article 94 The relevant provisions of this Law shall be
applicable to postal enterprises in handling relevant business of
commercial banks. 

Article 95 This Law shall go into effect as of July 1, 1995.

(Legislative Affairs Commission of the Standing Committee of the
National People’s Congress.)