China Banking Regulatory Commission issued the Draft Tentative Measures of Administration of Working Capital Loans (the “Working Capital Loan Measures”) at the end of July for public comment. The Working Capital Loan Measures aim to standardize the business of working capital lending carried out by banking institutions and prevent the misappropriation of working capital loans.

The Working Capital Loan Measures define working capital loans as loans in RMB or foreign currency released by a creditor to an enterprise or other entities as required for the purpose of daily operation. Except for fixed assets loans, other commercial loans borrowed by enterprises are subject to the Working Capital Loan Measures.

Two payment methods are provided in the Working Capital Loan Measures: entrusted payment method and independent payment method. Under the entrusted payment method, the creditor, upon the borrower’s withdrawal request and payment authorization, will pay the fund directly to the borrower’ transacting parties as provided in the loan agreement. Under the independent payment method, loans will be released and transferred to the borrower’s bank account and paid to the transacting parties by the borrower.

The adoption of the entrusted payment method is required in one of the following situations:

  • The borrower is a new client of the banking institution;
  • The borrower is a client that expands too rapidly or does not have a focused main business;
  • The borrower is a client without average or deteriorating creditworthiness;
  • A single payment exceeds 30 percent of contractual amount of the loan agreement and exceeds RMB 1 million;
  • A single payment does not exceed 30 percent of contractual amount of the loan agreement but exceeds RMB
  • 10 million; or
  • Other situations as determined by the lender.

By adopting the entrusted payment mode, lenders as creditors are able to pay the funds directly to the ultimate recipients, thus effectively controlling the working capital loans and preventing its appropriation.


  • Tentative Measures of Administration on Working Capital Loan (Draft for Soliciting Opinions)
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  • Issuing Authority: China Banking Regulatory Commission
  • Date of Issuance: July 30, 2009 / Pubic Comment Period: July 30, 2009 to August 26, 2009