l Transaction Banking l
Renminbi Services Frequently Asked Questions
Standard Chartered is a pioneer in providing cross-border RMB trade Table of Contents settlement and account services to our corporate clients across Asia and is Opportunities 2 playing a leading role in expanding this business beyond the region.
Participation Criteria 2 We know China. We established our first branch in Shanghai in 1858 and were one of the first international banks to locally incorporate in China in Scope of RMB Services 2 2007. Today, we have one of the most extensive networks of any foreign bank on the mainland with 53 branches and offices. RMB Account Services 4
Our Strengths 5 We were the first international bank to complete a cross-border RMB settlement transaction (July 2009) and the first Chinese onshore bank to make a short-term RMB loan to an offshore bank (September 2009).
We have the capabilities and strength to help you navigate this rapidly evolving market.
RMB Trade Settlement is a dynamic business which means this FAQ is constantly being updated and is by no means exhaustive. Please direct specific questions to your Relationship Manager or Transaction Banking consultant.
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Opportunities
Q How can our company benefit from RMB Trade Settlement? A • Protect and grow your existing business with trading partners in mainland China • Negotiate better contract terms with payments in RMB that can potentially translate into extended Days Payable Outstanding or shorter Days Sales Outstanding • Use an RMB cash position as a natural hedge for two-way import and export flows with China • Centralise and proactively manage RMB exchange risk • Improve customer relationships through more transparent pricing for RMB denominated goods from mainland suppliers
Participation Criteria
Q Which companies are eligible for RMB Trade Settlement with China? A Cross-border RMB transactions are available for goods and service transactions with 20 pilot regions (Beijing, Chongqing, Tianjin, Shanghai Municipalities, Liaoning, Jiangsu, Zhejiang, Fujian, Shandong, Hubei, Guangdong, Hainan, Sichuan, Yunnan, Jilin and Heilongjiang provinces, autonomous regions of Inner Mongolia, Guangxi, Tibet, and Xinjiang). All companies outside the mainland can settle in RMB with mainland companies (MDE1s or non- MDE1s) subject to the following conditions:
Goods Trade Settlement • Approved MDE1s can settle export and import transactions in RMB. • Non-MDE1s registered with the local People’s Bank of China (PBoC) across China can settle import transactions in RMB. N.B. Non-MDE1s registered with the local PBoC in Shenzhen and Guangdong can settle export transactions in RMB on the condition that they follow respective full set of foreign currency customs and tax rebate regulations and procedures.
Services Trade Settlement Approved MDE1s and non-MDE1s registered with local PBoC are allowed to settle such transactions in RMB.
Capital Investment Any transfer of RMB for other uses i.e. capital investment requires approval by mainland authorities on a case-by- case basis.
Scope of RMB Services
Q Can we convert our local or foreign currencies into RMB for trade settlement without using a RMB account? A • In Hong Kong: Companies have to execute all RMB trade settlement transactions through RMB account for the regulatory reporting purpose. • Outside China and Hong Kong: Companies are able to do so without using a RMB account.
Q After converting our local/foreign currency to RMB, can the proceeds be parked on deposit? A Converted RMB proceeds must be used to settle cross-border RMB trade transactions by the expected payment date. Prior to that, clients can park their funds in a deposit account (including term deposits).
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Q Is there any limit on how much local/foreign currency can be converted into RMB and remitted cross-border? A Yes. The following conditions apply: • Conversion of local/foreign currency to RMB is limited up to the amount of the relevant trade transactions to be settled if the exchange is ultimately squared through RMB clearing bank. Alternatively, there is no specific restriction on the RMB conversion if the exchange is squared through the offshore interbank deliverable market in Hong Kong.
Q Can we convert our local/foreign currency into RMB on an earlier date before payment is due? A Yes. If the exchange is ultimately squared through RMB Clearing bank, you must have proof of a genuine transaction and the participating bank will need to ensure that the converted RMB funds are not used for other purposes and will remit the funds to the MDE1 on the payment date. Otherwise, if the exchange is squared through the offshore deliverable interbank market in Hong Kong, the underlying transactions can be for general purposes, i.e. not necessarily be trade-related.
Q If we have multiple RMB accounts, can we transfer the funds to a single account? A Yes. There is no specific restriction by China’s regulators on RMB fund transfer outside Mainland China. For example in Hong Kong, RMB can be freely transferred among corporate and individual RMB accounts.
Q Can we initiate RMB remittances or FX transactions at your branches? A • In Hong Kong: In addition to Straight2Bank, all our RMB trade settlement services are available at our Wholesale Banking counters at designated branches. You can visit our Corporate Express Centre for all RMB services offered on your RMB account. To deposit/withdraw RMB cash to/from your RMB account, you can also visit any of our branches. • Outside China and Hong Kong: RMB transactions are only available via Straight2Bank. RMB services are not available at branches.
Q If we are an overseas exporter receiving payments in RMB, can we use those funds freely? A RMB funds received can be used freely subject to the funds not flowing back to mainland China (otherwise they are subject to Chinese regulations).
Q What types of RMB financing are allowed? A Corporates are eligible for all types of financing services. However they should ensure they have the ability to repay the financing in RMB.
Q Can we issue RMB bonds? A Corporates are allowed to issue RMB bonds in Hong Kong. Whether the RMB funds can be used on the mainland is subject to mainland regulations and control by authorities3.
Q What documents are required to be submitted for RMB remittance to and out of mainland China? A • Mainland authorities and banks are responsible for verifying whether transactions undertaken by mainland counterparts comply with the relevant rules. Trade supporting documents will be required from the China counterparts for banks in the Mainland for checking. • Banks outside the mainland will process the RMB transactions in accordance with usual banking practices and will remain vigilant against money laundering or other activities that violate overseas laws and regulations. Note that if the exchange is ultimately squared with the RMB Clearing bank, conversion from foreign currency to RMB is still subject to the existing requirements of supporting documents; otherwise, the exchange can be squared through the offshore deliverable interbank market in Hong Kong without the requirement of being trade-related.
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RMB Account Services
Q Can we open an RMB account with Standard Chartered? A Yes. An RMB account may be opened with Standard Chartered for the purpose of trade settlement in most countries. Please contact your Relationship Manager/Transaction Banking sales consultant for details.
Q What are the requirements for opening a RMB account for RMB trade settlement with China? A RMB account opening follows the same practices as other foreign currencies.
Q Can we have a surplus RMB balance standing in our RMB account? A According to current guidelines, there is no specific time constraint on how long the surplus RMB balance can remain in the RMB account.
Q Can I open a Non-Resident RMB Account (NRA5) in China? A Yes. Non-resident accounts are available for companies outside mainland China.
Q What types of fund transfer transactions are allowed for NRA5s? A Goods Trade Settlement • Approved MDE1 can settle export and import transactions in RMB. • Non-MDE1 s registered with the local People’s Bank of China (PBoC) across China can settle import transactions in RMB. N.B. Non-MDE1 s registered with the local PBoC in Shenzhen and Guangdong can settle export transactions in RMB on the condition that they follow respective full set of foreign currency customs and tax rebate regulations and procedures.
Q Services Trade Settlement A Approved MDE1s and non-MDE1s registered with local PBoC are allowed to settle such transactions in RMB.
Q Capital Investment A Any transfer of RMB for other uses i.e. capital investment requires approval by mainland authorities on a case-by- case basis.
Q Are fund transfers allowed between an NRA5 in China and a RMB account abroad? A Yes. Fund transfers are allowed between an NRA5 and an overseas RMB account on the condition that they are same name RMB transfers.
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Our Strengths
Q Why choose Standard Chartered for RMB transactions? A Standard Chartered is a leader in RMB services: • As a major international trade bank with direct membership of local clearing houses in China, we offer in-depth local knowledge of the mainland market • We have one of the largest foreign bank networks in China with access to many mainland corporates, including MDEs1, and strong working relationships with local banking associations and authorities • Our strong foreign exchange capabilities help you mitigate RMB exchange risk • Our user-friendly Straight2Bank electronic platform helps you improve account visibility and execute instructions quickly and securely
Q What RMB trade settlement services are available from Standard Chartered outside mainland China4? A • RMB account services • Two-way exchange services between RMB accounts and foreign currency accounts • Remittance services – inward and outward • Trade settlement and finance services – Letter of Credit opening and advising, collection and trade finance • Liquidity management solutions
1 MDE = Mainland Designated Enterprises. 2 Trade Settlement Enterprises. Note that Trade Settlement Enterprise (TSE) account is also referred as RMB account in Hong Kong. 3 Applicable to Hong Kong only. 4 All RMB trade settlement services offered are subject to relevant guidelines and regulations from authorities. 5 Non-Resident Account (NRA): This refers to an RMB Account onshore in China, opened by an overseas foreign enterprise.
This communication is issued by SC Group. While all reasonable care has been taken in preparing this communication, no responsibility or liability is accepted for any errors of fact, omission or for any opinion expressed herein. You are advised to exercise your own independent judgment (with the advice of your professional advisers as necessary) with respect to the risks and consequences of any matter contained herein. SC Group expressly disclaims any liability and responsibility for any losses arising from any uses to which this communication is put and for any errors or omissions in this communication. “SC Group” means Standard Chartered Bank and each of its holding companies, subsidiaries, related corporations, affiliates, representative and branch offices in any jurisdiction.
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