China banking regulator releases rules on new capital accord

(Xinhua)
Updated: 2008-10-17 22:34

BEIJING - The China Banking Regulatory Commission (CBRC) has released regulations to improve risk management of the country's banking industry.

The five guidelines covering risk exposure, loan monitor and account credit, among others, was the first batch of regulations released to prepare the industry for the New Basel Capital Accord, to be implemented in China by the end of 2010, said the commission.

The New Basel Accord, or Basel II, is recommendations on banking laws and regulations containing rigorous risk and capital management requirements designed to ensure a lender holds enough capital reserves to deal with risk in lending and investment. It aims at creating an international standard that would help protect the international financial system.

The guidelines are an important part of the supervision system to be established under the new capital accord, and more regulations would follow in future, said the commission.

The notice is delivered to local authorities, policy banks, state-owned commercial banks, incorporated commercial banks and postal savings bank.

Apart from the directions on calculation methods of supervision capital, which becomes effective after banks receives CBRC permission to implement new capital accord, the requirements and specifications in the guidelines should be implemented from October 1, said the notice.

"Capital supervision is the key of banking supervision. The new capital accord established three pillars -- minimum capital requirement, supervisory review and market discipline. It has strategic significance for major Chinese banks to improve its risk management capacities and for the country's financial system to maintain sound and long-term development," said a commission official.