Standard Chartered Bank (China) Limited today announced that it was the first foreign bank to have been granted approval for a RMB denominated loan quota on behalf of a leading American multi-national company client that specialises in global manufacturing and technology.
The approval of the RMB 3.3 billion cross-border lending quota from People's Bank of China Shanghai Branch is part of a pilot programme that supports foreign and local MNCs which have plans to channel surplus RMB capital in mainland China to fund RMB denominated activities overseas. Standard Chartered claim that this scheme has transformed the lending of RMB between companies from one based on a traditional entrustment loan (with banks as intermediary agents) to one where two parties sign lending agreements directly, agree interest rates and manage the loan draw down themselves.
In addition to ensuring that the submitted application met the various key requirements (satisfactory cross border lending rate, tax requirements, ability to monitor the utilisation of the quota, etc.) set out by PBOC, Standard Chartered is responsible for proposing the most efficient cross border lending structure to support its client's business goals. The quota is expected to support the MNC's Chinese Office's ability to lend RMB to its overseas parent or other related companies, which can in turn settle RMB denominated invoices.
George Nast, Global Product Head of Transaction Banking, Standard Chartered, said, "The RMB cross-border lending programme is a significant milestone of the RMB's journey of internationalisation. This programme will bring greater efficiencies and control to Shanghai based treasury centres where corporations can negotiate for better lending frequency and rates that match their actual needs."
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