January 2023
Yanting Pei and Teresa Huang
In order to better protect the legitimate rights and interests of small and medium-sized enterprises, taking into account the development practice and risk prevention requirements of the bill market, the People’s Bank of China (hereinafter referred to as the “PBC”) and the Banking and Insurance Regulatory Commission (hereinafter referred to as the “CBIRC”) jointly revised and issued the Measures for the Administration of Acceptance, Discount and Rediscount of Commercial Bills (hereinafter referred to as the “Measures”) in November 2022, which will replace the existing Interim Measures for the Administration of Acceptance, Discount and Rediscount of Commercial Bills (issued by Yinfa [1997] No. 216) (hereinafter referred to as the “Interim Measures”) and the Notice of the People’s Bank of China on Effectively Strengthening the Management of the Acceptance, Discount and Rediscount Business of Commercial Bills (Yinfa [2001] No. 236). The Measures shall come into effect on January 1, 2023.
The Measures consist of 8 chapters and 42 articles, including the general provisions, acceptance, discount and rediscount, risk control, information disclosure, supervision and management, legal liability and supplementary provisions. Compared with the Interim Measures, the Measures focus more on improving the credit management framework and market-based restraint mechanism of the bill market, strengthening the behavior norms of participating entities, clarifying supervision and management and legal liability[1], and removing the content related to rediscount and rediscount as well as the technical provisions, with significant changes in content.
The main revisions are reflected in the following aspects:
First, clarifying the nature and classification of the relevant bills. The Measures clarify that commercial bills include banker’s acceptance bill, acceptance bill of a finance company, commercial acceptance bill, etc., in paper or electronic form, stipulate that supply-chain bills belong to electronic commercial bills and provide for the qualifications of the acceptor of each type of commercial bill as well as the regulated acts.
Second, emphasizing the truthfulness of transactions. The Measures specify that the acceptor, whether it is a bank or finance company, shall strictly examine the truth of transactions and creditor-debtor relationship of the drawer when carrying out acceptance business. The holder applying for discount shall also prove that it has obtained the bill from a real transaction and creditor-debtor relationship (except for any bill obtained without compensation due to taxation, inheritance and gift according to law).
Third, strengthening information disclosure and credit restraint mechanism. The Measures stipulate that the acceptor of a commercial acceptance bill or an acceptance bill of a finance company shall disclose the main elements of the bill and the credit information in accordance with the regulations of the PBC; the acceptor of a banker’s acceptance bill shall disclose the credit information of the acceptor. At the same time, the discounter shall check the disclosed information when handling the discount business, and if any inconsistency is found, the bill shall not be discounted. In addition, the Measures also support the endorsee to verify the disclosed information of the bill at the time of transfer.
Fourth, enhancing risk control. The Measures provide that a financial institution shall have a sound management system and internal control system for bill business and prudently conduct commercial bill acceptance and discount business. The acceptor shall be in good operating and financial conditions, and have the ability to pay the bill at its maturity. Moreover, the Measures also set proportional caps on the maximum acceptance balance and deposit balance for a banker’s acceptance bill or an acceptance bill of a finance company, but the cap requirement will be implemented from January 1, 2024, which means that commercial banks and finance companies will be given a certain transition period. In addition, the Measures adjust the maximum term of a commercial bill from one year to six months, which means that the account period for using a commercial bill will be significantly shortened.
On top of that, the Measures also improve the legal liability for illegal acceptance and discount. In addition to facing administrative penalties, the violator may be held criminally liable. Overall, this revision puts more emphasis on matching the use of a commercial bill with the real transaction, so as to reduce the financial pressure of micro-, small and medium-sized enterprises, maintain a fair transaction relationship, and optimize the business environment[2]. If an enterprise needs to use commercial bills in its operations, it is recommended to pay attention to the changes in the account period and the related compliance obligations and risks brought about by this revision.
[1] Principals of the PBC and CBIRC Answer Questions of Journalists on the Revision and Issuance of the Measures for the Administration of Acceptance, Discount and Rediscount of Commercial Bills
[2] Ibid
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