On April 10, the National Financial Regulatory Administration released a draft revision of the "Measures for the Implementation of Administrative Licensing Matters for Rural Small and Medium-Sized Banking Institutions" to solicit public feedback. The move aims to further standardize the administrative licensing process for these institutions.
The draft measures consist of 8 chapters and 129 articles, largely maintaining the original structure while incorporating the latest regulatory requirements. These include policies for the market entry of rural commercial joint-stock banks, compliance management rules for financial institutions, and qualification standards for directors and senior executives of banking institutions. The document also optimizes internal review procedures, approval authority divisions, and reporting pathways for certain administrative licensing matters.
According to the draft, the establishment of a rural commercial bank or a rural commercial joint-stock bank must meet several conditions. These include having articles of association compliant with the Company Law, the Commercial Bank Law, and relevant regulations issued by the financial regulator. A rural commercial bank must be established on the basis of existing institutions such as rural commercial banks, rural cooperative banks, or rural credit cooperatives. A rural commercial joint-stock bank should be formed from a provincial-level rural credit cooperative union. The minimum registered capital must be fully paid-in and cannot be less than 50 million yuan. Additionally, the institution must have qualified directors and senior managers, a sound organizational structure, adequate business premises, and necessary security measures.
Further prudential requirements mandate that these banks demonstrate sound corporate governance, a clear rural finance strategy, and a mature business model. They must also possess effective risk management systems, capital constraints and replenishment mechanisms, and robust human resource policies. Information technology governance must support business operations securely, with necessary systems in place to ensure data and personal information security. The institution should have no record of serious regulatory violations or major internal management incidents in the past year, or such issues must have been rectified to the satisfaction of regulators.
Regarding the qualification permits for directors and senior executives, the draft specifies that candidates must have full civil capacity, possess the necessary knowledge and experience, and have a clean record of compliance and integrity. Individuals are disqualified if they have been convicted of crimes such as endangering national security, terrorism, corruption, bribery, or organized crime; have engaged in misconduct that severely violates social ethics; bear significant responsibility for regulatory breaches or major losses at previous institutions; or have held senior positions in institutions that were taken over, dissolved, declared bankrupt, or had their business licenses revoked—unless they can prove no personal responsibility.
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