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SAFE issues new forex card regulations
By Sun Min (China Daily)
Updated: 2004-07-16 08:40
The State Administration of Foreign Exchange (SAFE) yesterday issued new
foreign exchange bank card regulations in a bid to enhance supervision of
business.
Market changes mean that the new rule, which will take effect on September 1,
will see some adjustments being made to previous policies on forex-denominated
cards.
More curbs are being placed on overseas transactions using domestically
issued cards, while regulators are also loosening controls on the use of
overseas bank cards on the mainland.
For example, those holding cards issued by overseas institutions will be able
to draw cash in foreign currencies from designated banks. It was previously
impossible to use such foreign cards to withdraw forex cash on the mainland.
A SAFE spokesman said that this move will better satisfy cardholders' actual
demand.
But the major principles on the supervision on foreign currency cards, as
established in existing regulations, will not be altered. According to such
principles, foreign currencies are still prohibited to be used for circulation
in China and only current account transactions can enjoy full convertibility.
Regulators also decided to set a cap of US$10,000 on the maximum amount of
cash that can be drawn from domestically issued foreign exchange cards in six
consecutive months, in a bid to more closely monitor the use of domestic bank
cards overseas.
Restrictions will also be placed on the use of domestically issued cards for
trade deals and some specialized non-trade services. Use of such cards is
prohibited in gambling, cross-bank transactions and transactions under the
capital account.
The SAFE spokesman said that the authorities are generally very supportive of
the development of domestic bank card business, given the convenience brought
about by cards and their role in curbing illegal transactions.
A crucial aspect of the regulator's work is to establish more standards to
better regulate the business.
In the new rule, SAFE also has more detailed regulations on the procedure for
the forex and renminbi purchase and remittance by foreign currency card holders
and relevant repayment procedures.
Although China's bank card business is still rather undeveloped compared with
developing markets, it has been expanding rapidly over the past decade.
Foreign currency cards have also become increasingly popular among Chinese
people in recent years as more travel overseas.
By the end of 2003, 10 Chinese banks had issued 2.6 million foreign currency
cards, more than triple the figure in 2003, according to SAFE statistics.
Recorded overseas transactions (including cash-drawing and consumption) via
these cards totalled US$966 million last year, a 47 per cent rise from the
period between January and November 2002.
Foreign banks are still prohibited from issuing their own cards on the
mainland, although some are getting around this by setting up local
partnerships.
Local banks are trying to improve their expertise and offer more specialized
services for card customers in a bid to face up to these increasing challenges.
Shenzhen-based China Merchants Bank yesterday issued China's first debit card
that can be use for both domestic personal banking services and overseas drawing
and consumption. The card, named the All-In-One Gold Card, offers comprehensive
services ranging from personal banking, securities and foreign exchange trading
transactions to overseas use and cash withdrawal.
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