Photo: iStock
Photo: iStock

The China Banking and Insurance Regulatory Commission has issued four supporting documents to tighten regulations on financing guarantee companies, reported.

According to the new rules, companies must obtain a financing guarantee business license when they operate loan, bond and other financing guarantee transactions, including the act of issuing guarantees for the issuer of funds, trusts, asset management plans and asset-backed securities.

And banks are banned from cooperating with non-licensed financing guarantee issuers.

Meanwhile, the guarantee amount shall not exceed 10 times the financial guarantee company’s net assets, though financing to small and micro enterprises as well as farmers can by appropriately relaxed under certain conditions.

The assets of a financial guarantee company will be classified by I, II, and III categories, and the ratio of assets is managed to ensure liquidity.